Qualcomm (NASDAQ:QCOM) Reports Q2 In Line With Expectations But Stock Drops

July 30, 2025 at 17:13 PM EDT

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Wireless chipmaker Qualcomm (NASDAQ: QCOM) met Wall Street’s revenue expectations in Q2 CY2025, with sales up 10.3% year on year to $10.37 billion. The company expects next quarter’s revenue to be around $10.7 billion, coming in 0.8% above analysts’ estimates. Its non-GAAP profit of $2.77 per share was 2.1% above analysts’ consensus estimates.

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Qualcomm (QCOM) Q2 CY2025 Highlights:

Revenue: $10.37 billion vs analyst estimates of $10.35 billion (10.3% year-on-year growth, in line)
Adjusted EPS: $2.77 vs analyst estimates of $2.71 (2.1% beat)
Adjusted Operating Income: $3.54 billion vs analyst estimates of $3.47 billion (34.2% margin, 2.1% beat)
Revenue Guidance for Q3 CY2025 is $10.7 billion at the midpoint, above analyst estimates of $10.61 billion
Adjusted EPS guidance for Q3 CY2025 is $2.85 at the midpoint, above analyst estimates of $2.82
Operating Margin: 26.6%, up from 23.6% in the same quarter last year
Free Cash Flow Margin: 24.9%, down from 28.4% in the same quarter last year
Inventory Days Outstanding: 125, down from 144 in the previous quarter
Market Capitalization: $174.8 billion

Company Overview

Having been at the forefront of developing the standards for cellular connectivity for over four decades, Qualcomm (NASDAQ: QCOM) is a leading innovator and a fabless manufacturer of wireless technology chips used in smartphones, autos and internet of things appliances.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, Qualcomm’s 16.6% annualized revenue growth over the last five years was excellent. Its growth beat the average semiconductor company and shows its offerings resonate with customers, a helpful starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.

Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore's Law) could make yesterday's hit product obsolete today. Qualcomm’s annualized revenue growth of 5.7% over the last two years is below its five-year trend, but we still think the results were respectable. Qualcomm Year-On-Year Revenue Growth

This quarter, Qualcomm’s year-on-year revenue growth was 10.3%, and its $10.37 billion of revenue was in line with Wall Street’s estimates. Although the company met estimates, this was its third consecutive quarter of decelerating growth, potentially indicating a coming cyclical downturn. Company management is currently guiding for a 4.5% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 1.9% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and suggests its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

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Product Demand & Outstanding Inventory

Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.

This quarter, Qualcomm’s DIO came in at 125, which is 8 days above its five-year average. These numbers suggest that despite the recent decrease, the company’s inventory levels are higher than what we’ve seen in the past.

Key Takeaways from Qualcomm’s Q2 Results

We were impressed by Qualcomm’s strong improvement in inventory levels. We were also happy its adjusted operating income outperformed Wall Street’s estimates. Overall, this print had some key positives. The market seemed to be hoping for more, and the stock traded down 5.5% to $150.30 immediately after reporting.

Is Qualcomm an attractive investment opportunity at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.

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