What Happens To Qualcomm Stock If The New Revenue Earns Less?
Qualcomm stock has declined significantly due to a contracting smartphone market and a faster-than-expected exit by Apple as a customer. The company is attempting to pivot toward data center and automotive revenue to offset these losses, though these new segments currently carry lower profit margins.
Why it matters
Qualcomm's transition highlights the volatility of the semiconductor industry and the challenges major tech firms face when diversifying revenue streams away from mobile handsets.
Qualcomm (QCOM) is down 32% over the past three months, and the cause is not a mystery. The smartphone market has contracted as memory prices climbed, and Apple is exiting faster than the company had guided. Management has a credible plan to replace that revenue. The harder question is what the replacement earns.
Qualcomm Is Losing Apple Faster Than It Planned To
By the company’s own account, its share in the coming iPhone launch will be materially lower than the 20% it had previously estimated, and Apple product revenue is set to fall roughly 50% from the September quarter to the December quarter. Qualcomm’s own supply constraints are part of the reason. A customer exit that was always coming has been pulled forward.
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