Qualcomm results show a supercycle on the horizon: Analyst

Qualcomm reporting second quarter earnings moments ago for more on the results we are now bringing in Kevin Cassidy managing director and Senior research analyst at Rosen blad Securities and more insights and strategy founder and CEO and chief analyst Patrick Morehead gentlemen great to see you both Patrick I will start with you my friend look at Qualcomm they reported uh investors like this at least initially we're popping in the after hours Patrick but give me give me the the hot initial take here yeah so the big uh question was going to be around handsets right we saw some puts and takes uh between Qualcomm customers right apple is down but China is up I mean China first half 24 up 40% uh for Qualcomm there big surprise the biggest surprise was Automotive huge increase but even bigger was the fact that they went they increased their backlog from 15 from $30 billion to $45 billion up from 18 months ago that is pretty big I'm wondering how much of that is eight ass versus the rest of the line hopefully we'll hear on the call um Patrick let me follow up on that I'll get to the automotive business in just a bit because that is a really interesting um growth driver for the company now but it is still about the handsets we've seen to your point an improvement in growth at least in the Chinese market Qualcomm very Exposed on the back end of it as well on the issue of AI where what has the upgrade Cy look like right now for you yeah so uh we saw the first inklings of this with Samsung that did a little bit of on chip Ai and a lot of cloud Ai and we're seeing a lot of these same patterns in China but with qualcomm's new Chips coming out that super siize this AI by putting a much larger dedicated AI chip that combined with some upgrades to Android I'm very optimistic in the second half of this year that we could very well see the beginning of a super cycle and the same thing on the PC side that Qualcomm has recently entered inside Kevin I want Kevin I want to get you here as well with the stock up about three and a half percent here in the after hours your your your initial reactions Kevin yeah this is about what we are expecting and um it's actually uh you know a relief compared to what uh skyworks reported last night skyworks showed you know they have very high exposure to the iPhone and skywork showed that there was a weakening in demand in March and into April so it's good news that the Android Android side seems to be doing just fine um Kevin you know we had our Tech editor Dan h on set earlier talking about the integration of gen AI in these devices and he said look the hype is great but I don't know how different how different uh the user experience is right now with the smartphone you heard Patrick say there's a super cycle later this year do you agree with that uh yeah it's actually our thesis for for why we have Qualcomm as our top uh large cap name and uh you know I happen to have an s25 or 24 from Samsung and um you know it is I I traveled to Hong Kong I traveled to Taipei and I was able to do uh language translate on the phone and it didn't even have to be connected to the internet uh that was one that I thought was a great feature uh but I find also they have features such as uh powering down products that aren't being used you know where the phone is thinking ahead for you and so I get extremely good battery life with it and I I think there's going to be just a a whole bunch of more uh more uh applications being added you know even on the Qualcomm website they list about 300 different um models that you can use to develop uh software that would run on their qualcom Snapdragon for smartphones and Patrick I want to bring you here and talk a little bit more about China and you mentioned some the numbers we we got here Patrick I'm just curious you know for Qualcomm investors who are listening right now how should they think about China looking ahead for Qualcomm just in terms of the risks and the opportunities Patrick Yeah so the way that I characterize Qualcomm and China is that uh they can benefit in in nearly every high-end handset over there as long as it's not Huawei right uh with Apple down you have companies like xiaomi that are up and Qualcomm benefits now Qualcomm has content in apple too just not as much where in the high-end Chinese manufacturers they have the applications processor uh plus uh the Moda but the great news though overall is China is up people are buying smartphones again and as we discussed a little bit we're at the very beginning of this AI cycle and just to add on the commentary of that um we haven't seen uh yet people are really stealthing the capabilities in the new operating systems they don't want to talk about it yet because it's not ready but it will be we're going to start seeing some much more exciting things toward the middle of this year Kevin let's talk about the automotive business Qualcomm very much a company that is in transition right now they've really pushed this narrative about diversification the revenue coming in from the automotive business $63 million coming in stronger than expected as you look to the mix for this company how significant is the upside on the automotive side and what does it look like I mean the course handsets are we talking 50/50 I mean how do you see that Revenue mixed down the line well the the whole idea is that you're taking the smartphone and moving it onto the car so your car is going to be connected and I'm pretty sure that's where most of their revenue is and and even the display their uh their Snapdragon can run the display so just like your uh smartphone would uh then they have the being able to move into Adas but um I I'm not sure how quickly that's going to growth for them but I think just having the connected car is a significant growth already and then we'll just see how they move into the Adas Market from there Patrick I'm going to switch gears here a little bit uh Apple tomorrow my friend after the close we know we know there's been some worries here about the AI strategy China uh regulatory scrutiny what are you expecting tomorrow Patrick from the iPhone maker yeah I'm expecting uh some disappointment uh out there for a lot of reasons is a reduction is is a reality we saw those numbers from IDC and Canalis and I think we're going to see that included part of that reduction is the lack of an AI offering now Apple never needs to be first with much and I don't think they need to be first with this AI smartphone in fact they're not first it it's been Samsung but uh they have this iPad launch where they're going to talk a little bit about M4 and then going to have to talk a little bit about the AI and we're going to see the full unfolding at WWDC with Apple's AI strategy which will be very much on device and I think is a strength for apple as compared to where they are weak which is in the cloud Patrick Kevin great to see both you guys on the show today thanks so much for joining us okay thank you thank you

Channel: Yahoo Finance

Views: 6,704

Keywords: Yahoo Finance, Personal Finance, Money, Investing, Business, Savings, Investment, Stocks, Bonds, FX, Currencies, NYSE, Equities, News, Politics, Market, Markets, Yahoo FInance Premium, Stock market, Qualcomm

Id: 6L8CbBZ-Kj0

Length: 7min 21sec (441 seconds)

Published: Wed May 01 2024