Qualcomm’s CEO charts AI-led future as trade turbulence and handset volatility challenge outlook

How Is Qualcomm Reshaping Its Strategy Around AI and Edge Intelligence?

In Qualcomm Inc.’s second-quarter fiscal 2025 earnings call, President and Chief Executive Officer Cristiano Amon anchored the company’s strategic positioning firmly around artificial intelligence, on-device compute, and edge processing. The executive framed this pivot not as a cyclical tech cycle, but as a foundational shift reshaping mobile, industrial, and compute ecosystems.

Amon said Qualcomm’s long-standing focus on distributed intelligence was becoming increasingly validated as smaller generative AI models like Google Nano, Microsoft Phi, Meta Llama, and Alibaba Qwen gain momentum. Many of these models, he stated, were already operating on Snapdragon chipsets. This shift toward low-latency, device-side inference, he argued, mirrors a broader move away from cloud-dependent architectures and is increasingly being seen across smartphones, XR (extended reality) devices, and PCs.

He described the trend as similar to the smartphone evolution from feature phones in the early 2000s—initially driven by OS players, followed by an eventual explosion of third-party applications. Qualcomm, he noted, is positioning itself to capture this next phase through its portfolio of NPUs (neural processing units), with performance and power efficiency as competitive differentiators.

This strategic framing comes as global chipmakers face demand headwinds and geopolitical turbulence. But for Qualcomm, Amon stressed, the relevance of its technology across multiple verticals—mobile, auto, XR, PC, and industrial AI—remains the company’s North Star.

Why Is Qualcomm Focused on Expanding Snapdragon in Devices and Automotive?

According to Amon, the Snapdragon brand continues to evolve beyond mobile, increasingly underpinning the company’s diversification narrative. In handsets, the Snapdragon 8 Elite has achieved widespread traction across leading Android original equipment manufacturers, powering more than 90 flagship designs. He noted that foldable and flip-style phones have become a new high-end form factor, citing the Motorola Razr Ultra 2025 as a prominent Snapdragon-powered example.

In personal computing, the Snapdragon X series has shown notable penetration in the premium Windows market. Qualcomm now holds a 9% share of Windows laptops above the $600 price point in the United States and key European countries, with more than 85 designs in production or development. The company reaffirmed its target of commercialising over 100 Snapdragon-based PCs by 2026 and reaching $4 billion in PC revenues by fiscal 2029.

In XR, Amon highlighted Meta’s Ray-Ban smart glasses as a live example of Snapdragon enabling new AI-powered use cases such as live speech translation, location-based memory recall, and real-time computer vision. With over 15 designs from global OEMs now underway, Qualcomm is targeting $2 billion in XR revenue by FY29, driven by the shift toward immersive and hands-free AI interaction.

On the automotive side, the Snapdragon Digital Chassis platform was described as a central driver of new growth. Qualcomm secured 30 new automotive design wins during the quarter, including five ADAS programmes, and announced expanded engagements with Chinese automakers like Nio, Zeekr, Dongfeng, and Great Wall. The mix of content per vehicle continues to rise, especially in combined cockpit and ADAS solutions. Executives reiterated the company’s confidence in achieving $8 billion in automotive revenue by FY29.

What Financial Metrics Did Qualcomm Report for Q2 FY25?

CFO and COO Akash Palkhiwala reported Q2 non-GAAP revenue of $10.8 billion, representing 17% growth compared to the same period in FY24. Non-GAAP earnings per share rose 21% year-over-year to $2.85, exceeding the midpoint of guidance. QCT, Qualcomm’s core semiconductor segment, generated $9.5 billion in revenue, while QTL, the licensing arm, brought in $1.3 billion.

Handset revenues reached $6.9 billion, up 12% YoY, driven by premium-tier Android devices and strong traction in China. IoT revenue totalled $1.6 billion, a 27% increase, with industrial applications leading growth. Automotive revenue surged 59% to $959 million, marking continued strength in content expansion and design wins.

Licensing margins held steady at 70%, though handset volume softness in emerging markets led to QTL results landing slightly below internal forecasts. QCT’s EBT (earnings before tax) margin stood at 30%.

On capital returns, Qualcomm repurchased $1.7 billion in stock and paid $938 million in dividends, bringing total Q2 shareholder returns to $2.7 billion. The company increased its FY25 capital return target to 100% of free cash flow, citing strong cash generation and balance sheet flexibility.

What Is Driving Growth in Qualcomm’s Industrial and AI Software Businesses?

Beyond silicon, Amon emphasized Qualcomm’s effort to scale industrial AI through strategic acquisitions and partnerships. Two recent additions—Edge Impulse and FocusAI—were cited as instrumental to the company’s expansion into edge analytics.

Edge Impulse, a developer-centric AI platform with over 170,000 users, enables computer vision, time-series prediction, anomaly detection, and speech recognition on low-power devices. Amon said the integration of Edge Impulse with Qualcomm’s AI Hub creates an end-to-end development environment for industrial automation and predictive maintenance.

FocusAI, now part of the Snapdragon Dragonwing Intelligent Video Suite, enhances real-time video analytics at the edge. Combined, these moves are expected to accelerate Qualcomm’s penetration of industrial verticals such as manufacturing, logistics, and asset tracking—supporting its $4 billion revenue goal for industrial IoT by FY29.

The partnership with Palantir Technologies was also highlighted as a catalyst for embedding data ontology and real-time AI within Qualcomm’s platforms. This collaboration targets decision intelligence in offline and remote environments, especially in sectors where cloud connectivity is intermittent or restricted.

How Is Qualcomm Navigating Trade Policy Risks and Emerging Market Volatility?

On the macro front, Palkhiwala acknowledged that tariff concerns and global trade dynamics added uncertainty to Qualcomm’s Q3 outlook. While the company has not experienced any direct material impact from tariff changes, he said minor indirect effects—such as subdued customer ordering patterns—have been reflected in forward guidance.

For Q3 FY25, Qualcomm forecasts revenue between $9.9 billion and $10.7 billion, and non-GAAP EPS in the range of $2.60 to $2.80. At the midpoint, this implies 12% year-over-year growth in QCT, with handset revenue expected to increase 10% and both IoT and automotive to grow by 15% and 20%, respectively.

Amon added that despite the geopolitical climate, Qualcomm’s footprint in China remains robust. He said many Snapdragon-based products designed in China are intended for global export, which mitigates domestic policy shocks. Additionally, he emphasized that Qualcomm continues to see strong design traction across smartphones, PCs, XR, and auto platforms from its Chinese partners.

What Are Analysts and Investors Watching Post-Results?

Market reaction to the Q2 results was broadly positive, with analysts highlighting Qualcomm’s execution in AI, diversification beyond mobile, and expanding design win pipeline across high-growth verticals. Institutional flows during the earnings week reflected accumulation, especially in automotive-aligned and AI-leveraged semiconductor names.

Some investors remain cautious on gross margin trajectory, noting a slight sequential dip due to segmental mix and lower-tier handset volumes. However, Palkhiwala clarified that these effects were within expected parameters and margins remained stable within historical bands.

The company’s reiteration of long-term growth targets for PC, XR, automotive, and industrial AI provided reassurance, particularly amid concerns about slowing global handset sales and reduced Apple modem share, which is expected to decline to around 70% in fall 2025 iPhone launches.

What Is Qualcomm’s Outlook for the Rest of Fiscal 2025?

Qualcomm’s executives maintained that the company’s multiyear growth roadmap remains unchanged despite short-term uncertainties. Amon said that ongoing investment in next-generation NPUs and Snapdragon AI platforms would underpin ASP (average selling price) growth and design win momentum.

He also highlighted a growing focus on software-enabled differentiation, especially as third-party developers begin to build AI-driven features on top of Qualcomm’s platforms in both mobile and PC. Microsoft’s continued rollout of Copilot+ AI features and enhanced productivity tools on Snapdragon-powered laptops is expected to be a key growth driver.

On M&A, the leadership indicated openness to further bolt-on acquisitions to expand industrial and automotive software capabilities. While no specific targets were discussed, the company appears likely to build out its edge analytics and AI toolchain in support of its long-term $35 billion+ revenue ambition by FY29.