It has been about a month since the last earnings report for Qualcomm (QCOM Quick QuoteQCOM - Free Report) . Shares have added about 13.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Qualcomm due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Qualcomm Q2 Earnings Top on Solid Automotive Revenues

Qualcomm reported relatively healthy second-quarter fiscal 2024 results, with the bottom and top lines beating the respective Zacks Consensus Estimate, driven by healthy demand trends in Android handsets and automotive businesses. Both metrics improved year over year, led by the strength of the business model, revenue diversification and the ability to respond proactively to the evolving market scenario.

Management expects a steady improvement in the demand trajectory in the remainder of fiscal 2024. With solid quarterly results and a bullish outlook, shares were up post earnings release.

Net Income

On a GAAP basis, net income in the March quarter improved to $2,326 million or $2.06 per share from $1,704 million or $1.52 per share in the prior-year quarter. The increase in GAAP earnings was primarily attributable to top-line growth and lower operating expenses.

Quarterly non-GAAP net income came in at $2,761 million or $2.44 per share compared with $2,420 million or $2.15 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 14 cents.

Revenues

On a GAAP basis, total revenues in the fiscal second quarter were $9,389 million compared with $9,275 million in the prior-year quarter. The quarterly revenues beat the consensus mark of $9,301 million. Despite soft industrial IoT demand patterns, Qualcomm registered record automotive revenues owing to solid momentum from the Snapdragon Digital Chassis platform. Strength within the handset business also buoyed the top line. Non-GAAP revenues in the reported quarter were $9,386 million compared with $9,268 million a year ago.

Segment Results

Quarterly revenues from Qualcomm CDMA Technologies (QCT) were $8,026 million, up from $7,942 million, as strength in the automotive platform and higher demand in handsets was partially offset by channel inventory drawdown within the IoT business. The segment’s revenues exceeded our revenue estimates of $7,909 million. The company witnessed solid market traction in the EDGE networking business that helps transform connectivity in cars, business enterprises, homes, smart factories, next-generation PCs, wearables and tablets.

Automotive revenues rose 35% to a record high of $603 million, driven by increased content in new vehicle launches with its Snapdragon Digital Chassis platform. This was the 14th consecutive quarter in which Qualcomm recorded double-digit growth in automotive revenues. The company expects automotive revenues to increase to more than $4 billion in fiscal 2026. Handset revenues were up 1% to $6,180 million, primarily led by the increased deployment of the Snapdragon 8 Gen 3 mobile platform in new Android flagship launches. However, IoT revenues were down 11% to $1,243 million due to the channel inventory drawdown. EBT margin for the QCT segment rose to 29% from 27%.

Qualcomm Technology Licensing (QTL) revenues totaled $1,318 million, up 2% year over year, owing to strength in handset and automotive businesses. The segment’s revenues missed our estimates of $1,360 million. EBT margin improved to 71% from 68%.

Cash Flow & Liquidity

Qualcomm generated $6,503 million of net cash from operating activities in the first six months of fiscal 2024 compared with $4,552 million a year ago. At quarter-end, the company had $9,219 million in cash and cash equivalents and $14,543 million of long-term debt. The company repurchased 5 million shares for $731 million during the quarter.

Q3 Guidance

For the third quarter of fiscal 2024, Qualcomm expects GAAP revenues of $8.8-$9.6 billion due to market stabilization, recovery in market demand and portfolio strength. Non-GAAP earnings are projected to be $2.15-$2.35 per share, while GAAP earnings are likely to be $1.74-$1.94 per share. Revenues from QTL are expected to be between $1.2 billion and $1.4 billion. For QCT, the company anticipates revenues between $7.5 billion and $8.1 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

The consensus estimate has shifted 5.29% due to these changes.

VGM Scores

At this time, Qualcomm has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Qualcomm has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Qualcomm belongs to the Zacks Wireless Equipment industry. Another stock from the same industry, Nokia (NOK Quick QuoteNOK - Free Report) , has gained 4.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.

Nokia reported revenues of $5.07 billion in the last reported quarter, representing a year-over-year change of -19.4%. EPS of $0.10 for the same period compares with $0.06 a year ago.

Nokia is expected to post earnings of $0.05 per share for the current quarter, representing a year-over-year change of -37.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -9.1%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Nokia. Also, the stock has a VGM Score of A.