Qualcomm shares surged approximately 9.7% to $146.97 in early trading Friday, extending a 10-day winning streak that has lifted the stock by about 11%. However, the rally faces a critical test next week when the company reports its fiscal second-quarter earnings after the bell on April 29, with executives scheduled to address investors at 1:45 p.m. Pacific Time.
The company is guiding for fiscal Q2 revenue between $10.2 billion and $11 billion, with adjusted earnings per share in the range of $2.45 to $2.65. Handset chip sales are expected to land near $6 billion, constrained by ongoing memory supply limitations that are hampering production despite steady processor demand.
Concentration risk remains a key concern. In the prior quarter, handset chip sales accounted for 73% of Qualcomm's chip-division revenue, according to Barchart. Automotive segment revenue reached $1.1 billion, while Internet of Things (IoT) contributed $1.7 billion. Although these segments are growing, their scale is insufficient to offset weakness in the smartphone market.
CEO Cristiano Amon has been candid about the challenges. "I just wish we had more memory," he told Reuters after the last earnings report, noting that phone makers, particularly in China, are working down inventories to cope with memory supply constraints. Bob O'Donnell, chief analyst at TECHnalysis Research, told Reuters the shortage could persist "for the next several quarters."
Wall Street's patience is wearing thin. JPMorgan analyst Samik Chatterjee downgraded Qualcomm to Neutral from Overweight and slashed his price target to $140 from $185, citing intensifying competition in the data-center chip market and near-term headwinds in smartphones. Chatterjee noted a lack of evidence that Qualcomm can gain traction in data centers, where rivals Nvidia and Arm are already well entrenched.
The broader semiconductor sector has been on a tear, with the Philadelphia Semiconductor Index notching 17 consecutive gains through Thursday, according to Reuters. A busy week of tech earnings from Microsoft, Alphabet, Amazon, Meta, and Apple will test whether investors continue to bid up AI-related stocks.
Meanwhile, Adobe shares traded nearly flat at $238.76 despite the company announcing a massive $25 billion share buyback program running through April 30, 2030. The stock has declined roughly 30% year-to-date amid concerns that new AI-powered design tools could cannibalize demand for its traditional software. CFO Dan Durn described the buyback as "a direct expression of confidence" in Adobe's cash flow and long-term value creation.
Adobe is also pushing forward with its AI strategy. At its Summit, the company launched CX Enterprise, an "agentic AI" platform designed to handle multi-step tasks under human supervision. The software will run on cloud platforms from Amazon Web Services, Anthropic, Google Cloud, IBM, Microsoft, Nvidia, and OpenAI. "We're looking to move teams beyond AI experiments, to real business outcomes," said Anil Chakravarthy, president of Adobe's customer experience group.
Leadership changes are adding another layer of uncertainty. In March, Adobe announced that CEO Shantanu Narayen, who has led the company for 18 years, will step down after a successor is named, remaining as board chair. Investors now face two key questions: how Adobe's AI strategy will evolve and who will take the top job.
The risks for Qualcomm are clear: its rally could quickly reverse if the April 29 guidance points to a prolonged memory crunch, continued weakness in China smartphone demand, or a slower-than-expected data-center ramp. For Adobe, the buyback may support earnings per share, but it doesn't address the fundamental challenge of whether competition from AI upstarts like Anthropic and Figma will ultimately reshape customer spending patterns.
