The Six Five team discusses Qualcomm Q1 FY2024 earnings.
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Transcript:
Patrick Moorhead: How did Qualcomm do? Basically they crushed it on EPS, 16%, and revenue beat by 4%. And by the way, this was not a no-brainer. I did some analysis going into my Yahoo Finance gig and I said, “Hey, here’s some of the stuff that I’m looking at.” And then let me compare how I did on that. The one thing I was a little uncertain of is that the market was up about 8% the fourth quarter calendar. Apple gained share, Samsung lost share. Qualcomm has more profitable content in Samsung than they do Apple. They sell to both of them. So I was unsure how that would work out. What that ended up doing was a 4% revenue boost, which kind of makes sense. They didn’t get the full 8% lift, but they got about half of that.
One question I had was on Samsung, which is, with this new stuff coming up and Samsung doing a little bit of Exynos here, can they maintain that 92% or 95% market share in premium Android? Boom, Qualcomm comes out and basically announces that they’ve extended their agreement with Samsung, which was great for premium smartphones. And if you remember, I wrote a piece around CES, around ARM’s Blackhawk coming out. It looks like Samsung will be going with Qualcomm and not Blackhawk. But hey, we’ll see.
The other question I had was on automotive. It’s like, hey, automotive share content gained versus a car slowdown that we’re seeing from a couple of semiconductor guys going on. I said I expected big Qualcomm growth, and 30%. So hit that one. I said that IoT would not be good. It would be terrible because quite frankly, every other IoT and embedded play that we’re seeing is going down. Heck, even the Lattice went down after 19 quarters, and they are 100% embedded. And yeah, IoT went down substantially. So is this a little bit of a victory lap on this? Yeah, kind of. Sorry.
Daniel Newman: Wait. Pat Moorhead doing a victory lap. And in other news, the sun came up today. Oh, buddy.
Patrick Moorhead: I got to hit it. Got to hit it when you hit it. I don’t hit all of them, but I’m feeling pretty good about me calling it. By the way, if you want to look at five minutes of video glory, check out my interview on Yahoo Finance.
Daniel Newman: …my CNBC. Oh, sorry, what?
Patrick Moorhead: Were you on CNBC for Qualcomm?
Daniel Newman: No, I was on CNBC about the whole tech industry. I generally get asked to opinionate about the entire market.
Patrick Moorhead: Opine. It’s called opine.
Daniel Newman: Opinionate.
Patrick Moorhead: No, no, no, no. Opine.
Daniel Newman: I know. I just messed up. Now I’m having a hard time because I have an ego because I’m an analyst admitting that I even said the wrong word. It’s going to take me a while to get around to this. Should I talk about Qualcomm now or can I talk more about CNBC?
Patrick Moorhead: Just start with the victory lap. And if it comes to Qualcomm-
Daniel Newman: I just want to point out in June of 2022 when the market bottomed out and I said NVIDIA and Microsoft were the ultimate buys. That was really, really right. Really right. You should drop a link on the show notes if anyone’s actually reading them before they post them. There’s a moment where I said, drop a link. But no, Pat, your interview was actually really good. And by the way, the best part about it was you only had about a minute to process what you looked at. And those are always the funnest interviews. That’s my specialty, by the way.
Patrick Moorhead: They actually are.
Daniel Newman: Is that quick, kind of instant, visceral reaction. I expected good from Qualcomm. If you listened to the last quarter, you knew there was a turning point. Bottoms had been communicated. And most of the device makers, if you looked at TSMC’S results, you can actually make some pretty good prognostications about other companies depending on different processes that they talk about, different volumes and different ramps. Qualcomm is of course tied closely to Samsung, to Apple, to all the other major. And basically what we knew was the inventory burnoff had happened. There had been an indication of that, which meant orders were going to start to flow. So the expectations were somewhat in line, but really good. Meaning it was good execution against a better market condition.
Handsets are really stable, still waiting for some AI revenue. I want to understand the AI revenue. I think Qualcomm’s working on a lot of interesting things, and I can’t really speak to all of them, but what I can say is I do think they’re going to find new ways to monetize AI. Pat, the automotive business is super exciting. And by the way, they’re completely countercyclical to that business, because automotive is not strong right now, but they’re strong in automotive.
This is the ultimate win, chest thumping moment for Antonio. Antonio? Christiano and Nicole. For Christiano and Nicole, they knocked it out of the park, that 30 billion automotive pipeline that they’ve developed. What you’re now starting to see is the designs are becoming production and production is becoming revenue. And you’re seeing this ramp is really easy to predict that it will continue as more designs come out. And if this is the softer part of the car market, wait until volumes start to ramp on some of these cars, both domestically and globally. That’s super exciting, Pat. And I was actually forecasting that out, in about five to six quarters that could become a billion dollar a quarter run rate revenue for the company. So automotive, great win.
Pat, I’m going to tell you one more thing. I don’t think they spent a lot of time on it, but Qualcomm has a really interesting new business with the AI/PC. They got a super performance, can’t wait for Signal 65 to start taking a look at some of this stuff. Super performant NPU with some really exciting designs. And they are entering the market, and they’re not coming in soft. They’re coming in guns blazing. So I’m very excited to see how that translates. I’m chewing words today, I swear. How that translates to revenue in the second half of the year because there’s a consistent understanding amongst this industry, that second half is when we really start to see this.
Patrick Moorhead: That’s a great way to end. And it was interesting that, of that entire five minute Yahoo Finance interview, the headline in the written document was, “Analyst basically says Qualcomm has a sizable AI advantage.” And boom. And Yahoo Finance was very interested in that AI/PC market.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
