The computer chipmakers Qualcomm Inc. and Arm Holdings Plc both reported strong earnings and revenue beats as they delivered their latest financial results today, yet while the former’s stock popped in extended trading, the latter’s flopped.

Qualcomm reported fiscal fourth-quarter earnings before certain costs such as stock compensation of $2.69 per share, easily ahead of Wall Street’s $2.56 target, while its revenue came to just over $10.24 billion, breezing past the consensus estimate of $9.9 billion. Looking to the current quarter, it’s forecasting sales of between $10.5 billion and $11.3 billion, with the midpoint of that range beating the Street’s forecast of $10.6 billion.

The smartphone chipmaker also reported net income of $2.92 billion in the quarter, a big jump from the $1.49 billion profit it delivered in the same period one year ago. Finally, it delivered $33.19 billion in total revenue for fiscal 2024, up 9% from the prior year.

Qualcomm’s stock made rapid gains on the report, and at one stage it was up more than 10% before settling back down to a 6% gain. That came after the stock rose 4% during the regular trading session prior to the results, as the overall market boomed on Donald Trump’s presidential election win.

The company’s fortunes have long been tied to that of the smartphone sector, as it’s focus is primarily on chips for handsets such as system-on-a-chip processors, antennas and modems. It provides the chips that power the vast majority of the world’s Android smartphones, and also sells modem and related chips to Apple that are used in iPhones.

Handset chip sales in the quarter rose 12%, to $6.1 billion, and the company is expecting good things from its latest high-end chip, the Snapdragon 8 Elite, which was launched in October and will ship in its first Android phones in the coming weeks.

In recent times, under Chief Executive Cristiano Amon (pictured, top), Qualcomm has attempted to move away from its reliance on smartphones, investing heavily into other industries, such as personal computers, automotive vehicles and industrial machines. In a conference call with analysts, the CEO promised to step up those efforts in the coming fiscal year in order to capitalize on the demands for high-powered processors that can power artificial intelligence workloads.

“We will continue to transform Qualcomm from a wireless communications company into a connected computing company for the age of AI,” Amon said.

Qualcomm’s QCT segment, which covers sales of chips for handsets, cars and other markets, delivered revenue of $7.37 billion in the quarter, up 18% from a year earlier. The QTL segment, which licenses the company’s patented technologies to smartphone makers, added $1.52 billion, up 21%.

Holger Mueller of Constellation Research Inc. told SiliconANGLE that Qualcomm had an excellent quarter, with all revenue lines showing decent growth.

“Its growth in the automotive sector is especially encouraging, as that market has always been a slow-going one for Qualcomm,” Mueller explained. “So growth of 68% this time around is pretty impressive. This helped Qualcomm to almost double its earnings per share.”

Looking ahead, the analyst said, investors will be watching uptake of the new Snapdragon 8 Elite platform, which is key to its immediate growth prospects.

“Amon and his team remain optimistic yet realistic about the company’s prospects, and the company should keep growing for the time being,” he said.

Arm tops expectations but its stock wavers

In its fiscal second-quarter results, Arm delivered similarly impressive numbers, reporting earnings before certain costs of 30 cents per share, beating the Street’s target of 26 cents. Revenue for the period came to $844 million, ahead of the $810 million analyst consensus estimate.

For the current quarter, Arm is guiding for revenue in a broad range of $920 million to $970 million, the midpoint of which also comes in above consensus of $939 million.

Unlike Qualcomm, which sells chips produced by contract chipmakers, Arm doesn’t actually sell processors itself, but rather licenses its chip designs to semiconductor and smartphone makers. Its most advanced technology, called Armv9, is said to be delivering twice the royalty rates of its predecessor Armv8.

In addition to smartphones, Arm is also making strong advances in the cloud server processor segment. Customers such as Microsoft Corp. and Nvidia Corp. build advanced processors for AI and other workloads based on its designs.

Arm CEO Rene Haas (pictured, above) said demand for the Armv9 and CSS compute platforms continues to exceed expectations. “AI is everywhere and is generating new opportunities for the Arm compute platform from the cloud to the edge,” Haas added.

Despite the strong results, investors were not nearly as impressed with Arm as they were with Qualcomm, and the company’s stock fell more than 5%, erasing a gain of 2% during the regular trading session.

Mueller said Arm is on a nice growth path that enables it to continue building out its business in an organic way.

“Its licenses keep growing, and with that so does its revenue, even though the average revenue per license is down slightly,” the analyst said. “Haas and his team will want to work to get their remaining performance obligations back to the $2.4 billion mark it saw during the last full year, but there’s reason to believe it can for the company keeps on investing in innovation. It’s good to see that Arm is growing its team, and more importantly, 83% of its employee base is engineers working on research and development.”

Arm happens to be embroiled in an increasingly bitter legal dispute with Qualcomm, which is one of its largest customers. Last month, the company reportedly gave Qualcomm a 60-day notice that it intends to cancel its architectural chip design license.

The dispute stems from Qualcomm’s 2021 acquisition of a chip design startup called Nuvia. Arm sued Qualcomm shortly after it completed that acquisition, arguing that the company should have asked for its consent to use Nuvia’s intellectual property, which is based on designs created under its architectural license from Arm.

The matter is expected to go to trial next month.

Photos: Qualcomm and Arm/YouTube