Qualcomm stock fell about 4% on July 30 after fiscal Q3 earnings beat on revenue but missed on profit, with weak Q4 guidance on top. The company, one of the biggest suppliers of chips for Android phones, saw its stock slide on Thursday, July 30. Shares fell about 3.7%, trading around $149.98 in pre-market trading, after the company’s fiscal Q3 earnings beat on revenue but missed on profit. The stock had already fallen as much as 8% in after-hours trading on Wednesday, July 29, before paring some of that loss by Thursday morning.
Margin Squeeze and Price Hikes
The chipmaker posted $9.9 billion in revenue, which beat the $9.68 billion Wall Street expected, so overall demand for its chips held up fine. However, adjusted earnings of $2.21 a share came in a couple of cents below the roughly $2.22 consensus, because rising memory chip and component costs are eating into profit. CEO Cristiano Amon pointed to memory chip shortages and rising component costs, and said Qualcomm will raise prices across its entire chip lineup starting September 1. The company struggles to keep pace in the AI boom as it reports loss in Q4 FY2025, largely due to the burden placed on its handset business by these escalating memory expenses.
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Outlook was a bigger worry. Qualcomm guided Q4 earnings to $2.05 to $2.25 a share, a range whose middle sits well below what analysts had already priced in. The deal closed just as the broader AI market began to show signs of cooling, raising questions about whether Modular’s valuation was too high. For users of Android phones, the immediate impact of Qualcomm’s price hikes will likely be higher device costs or thinner profit margins for phone manufacturers. The company is the primary supplier of processors for the majority of smartphones running Google’s mobile operating system, so changes in its pricing structure ripple through the entire supply chain.
Strategic Shift to Artificial Intelligence
The same day, in a separate move, Qualcomm closed a $3.9 billion acquisition of AI software company Modular, a deal that shows exactly where the company is placing its next bet. Qualcomm put Modular co-founder Chris Lattner in charge of its AI software strategy, signaling a push into the booming artificial intelligence market despite the current financial headwinds. Investors usually respond well to acquisitions, especially in high-growth sectors like AI, but the timing of Modular has drawn scrutiny. The company was founded in 2016 and raised roughly $400 million in venture capital, yet it has not yet generated significant revenue. This lack of immediate revenue generation contrasts sharply with the immediate financial pressures facing the core chip business.
