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Qualcomm Stock Surges On Q4 Earnings Beat, Solid 2022 Profit Outlook

Qualcomm, a key Apple supplier, said fiscal 2022 profits could grow by more than 20% following a stronger-than-expected Q4 earnings report.

Qualcomm  (QCOM) - Get Qualcomm Inc Report shares leapt higher in pre-market trading after the chipmaker, and key Apple  (AAPL) - Get Apple Inc. Report supplier, blasted fourth quarter earnings estimates and issued a robust holiday-quarter forecast.

Qualcomm, which dominates the global market for high-end smartphone semiconductors, said current quarter revenues should rise to $10.4 billion, while overall profits for its 2022 fiscal year, which ends in September, could grow by more than 20%.

For the three months ending in September, the group's fiscal fourth quarter, Qualcomm posted stronger-than-expected profits of $2.55 per share on record high revenues of $9.32 billion.

"We continue to see incredibly strong demand across all our technologies as the current environment is accelerating the scale of connectivity and processing at the edge," CEO Cristiano Amon told investors on a conference call late Wednesday. "We still expect material improvements to our supply by the end of the calendar year, and our second sourcing initiatives remain on track."

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Qualcomm shares were marked 12% higher in early trading Thursday to change hands at $155.02 each.

Qualcomm's solid holiday-quarter forecast could offer some relief linked to supply concerns at Apple, where reports have suggested it's paring back production runs for the iPad in order to keep enough chips available for its flagship iPhone 13.

Apple noted last week that supply chain woes ripped $6 billion from its September quarter sales and expected the disruption to impact its current quarter revenues following a fourth quarter earnings report that included the tech giant's miss on sales in around five years. 

Qualcomm's Android exposure, however, as well as the breadth of its chips and software division, known as 'QCT', and the acceleration of demand linked to 5G expansion, gives the company a solid cushion in the event of an Apple demand lull.

"As industry supply-demand dynamics likely normalize during C2022, we anticipate Qualcomm is likely to benefit through F2023 and beyond as 5G smartphones ramp, the company’s mix of 5G grows with 50% greater content than 4G smartphones, the RF business expands, and strong trends in IoT and automotive augment overall revenue growth and expand margins," said Canaccord Genuity analyst T. Michael Walkley, who carries a 'buy' rating with a $225 price target on the stock.

"Qualcomm has a strong 5G leadership position that should not only result in strong share gains with leading smartphone OEMs, but also drive strong long-term growth in IoT, RF, and automotive," he added.