Qualcomm Q2 FY2025 results: Automotive surge, share buybacks drive resilient performance amid trade pressures

How did Qualcomm perform financially in Q2 FY25?

Qualcomm Incorporated (NASDAQ: QCOM) delivered a robust set of results for the second quarter of fiscal year 2025, reporting strong revenue growth driven by strategic diversification across non-handset verticals. The San Diego-based semiconductor and IP licensing major posted GAAP revenues of $10.98 billion, representing a 17% year-on-year increase, while non-GAAP revenues rose 15% to $10.84 billion. Net income grew 21% to $2.81 billion under GAAP, and 15% to $3.17 billion on a non-GAAP basis.

Earnings per share also reflected the strong operational momentum. Diluted EPS came in at $2.52 on a GAAP basis and $2.85 on a non-GAAP basis, showing 22% and 17% growth, respectively. Operating income expanded to $3.12 billion from $2.34 billion in the prior-year quarter, underlining Qualcomm’s disciplined cost management and product mix optimisation.

What were the key drivers of Qualcomm’s Q2 revenue growth?

The primary engine behind the quarter’s revenue expansion was Qualcomm’s QCT (Qualcomm CDMA Technologies) segment, which includes chips for handsets, automotive systems, and internet of things (IoT) applications. QCT revenues reached $9.47 billion, marking an 18% year-on-year increase. Within this, handset revenues rose 12% to $6.93 billion, while automotive chip revenue surged 59% to $959 million. IoT-related revenue also increased by 27% to $1.58 billion, driven by industrial and edge-device demand.

The QTL (Qualcomm Technology Licensing) segment remained stable at $1.32 billion in revenue, flat versus the same period last year. EBT from QTL was $929 million, with segment margins holding firm at 70%.

These figures demonstrate Qualcomm’s continued push to reduce dependency on smartphones by expanding into high-growth verticals such as autonomous vehicles and industrial IoT.

What does the Q3 FY25 guidance reveal?

Looking ahead, Qualcomm issued revenue guidance in the range of $9.9 billion to $10.7 billion for the third quarter of FY25. QCT revenue is forecast between $8.7 billion and $9.3 billion, while QTL is projected to contribute $1.15 billion to $1.35 billion. The company expects GAAP EPS to fall between $2.14 and $2.34, while non-GAAP EPS is projected at $2.60 to $2.80.

This outlook, while still reflecting broad stability, underscores the company’s caution in navigating the macroeconomic environment and potential disruptions in global trade—especially with China, where a substantial portion of its licensing and chip businesses is concentrated.

How has Qualcomm returned capital to shareholders?

During Q2 FY25, Qualcomm returned $2.7 billion to shareholders. This included $938 million in dividends, equal to $0.85 per share, and the repurchase of 11 million shares worth $1.7 billion. This level of capital return underscores Qualcomm’s commitment to distributing cash generated from operations and maintaining investor confidence amid an evolving business cycle.

What is Qualcomm’s strategic positioning within the semiconductor industry?

Qualcomm continues to invest significantly in R&D, allocating $2.2 billion in the quarter to reinforce its position in AI-enabled edge computing, automotive systems, and low-power connectivity. Its Snapdragon platform remains a flagship technology for premium mobile devices, while the emerging Dragonwing product line is enabling enterprise and industrial applications.

The company is also focusing on licensing revenue through its vast patent portfolio, which continues to generate stable cash flows and offers resilience against short-term hardware cycles. While geopolitical uncertainty—especially U.S.-China trade tensions—remains a structural risk, Qualcomm’s broader portfolio mix is now better equipped to weather market fluctuations.

How is Qualcomm’s stock reacting post-earnings?

Following the Q2 FY25 earnings release, Qualcomm’s stock experienced an 8% decline, dropping to around $136 per share. This pullback came despite the strong quarterly performance, as investor focus shifted to the company’s muted Q3 revenue guidance and concerns over macro headwinds.

Over the past 12 months, QCOM shares have fallen nearly 17%, with investor sentiment tempered by Apple Inc.‘s continued pursuit of in-house chip development. This trend has raised questions about the long-term revenue trajectory of Qualcomm’s mobile segment.

Technical charts reveal that Qualcomm’s stock has been trading within a descending channel since June 2024. Key support levels are seen at $135 and $126, while resistance is expected near the $153 mark, corresponding with the 50-day moving average. A breakout past $153 could target the $176 level, based on historic performance patterns.

What does institutional sentiment reveal about Qualcomm?

Institutional ownership of Qualcomm stock stands at approximately 74.35%. Over the past year, institutional inflows totalled $19.64 billion, while outflows amounted to $11.98 billion. Major stakeholders include Vanguard Group Inc., BlackRock Inc., and State Street Corp., with recent filings showing mixed moves—some increasing exposure, others trimming positions.

This mixed institutional posture reflects the broader uncertainty surrounding smartphone demand and geopolitical risk. However, the consistent capital returns and earnings visibility from non-handset verticals are helping to retain long-term interest among funds and ETFs targeting the semiconductor sector.

What do analysts recommend for Qualcomm stock?

Analyst sentiment on Qualcomm remains divided. While many maintain a “buy” or “overweight” rating due to the company’s leadership in wireless IP and emerging verticals, others have moderated expectations for the remainder of FY25.

For instance, analysts at JPMorgan recently lowered their revenue and profit expectations for the year, citing slower smartphone recovery and measured adoption of AI-focused devices. They retained an “overweight” rating but revised the price target down to $195 from $210. Such caution reflects industry-wide concerns over excess inventory and macro demand softness.

Meanwhile, independent models forecast a short-term dip in QCOM’s value, estimating a near-term downside of approximately 2.5%, with prices potentially reaching $132.92. The broader sentiment index also signals “fear,” indicating growing risk aversion among retail and institutional traders alike.

What are the broader implications for long-term investors?

Qualcomm’s strategic rebalancing—from a mobile-centric revenue model to a multi-vertical approach spanning automotive, IoT, and AI infrastructure—continues to gain traction. The company’s strong margin profile, sustained capital returns, and investments in next-generation connectivity and processing technologies position it well for long-term value creation.

Yet, investors must weigh these positives against near-term challenges such as licensing headwinds in China, client vertical integration (notably Apple), and the broader cyclicality of the semiconductor space.

In light of these factors, long-term investors may view Qualcomm as a “buy on dips” candidate—particularly if the stock tests support levels and forward earnings visibility remains intact. Meanwhile, shorter-term holders are likely to remain cautious until Q3 earnings provide further clarity on growth momentum across verticals.