Qualcomm's High-Stakes Earnings: Billion-Dollar Drama, Market Buzz, and a Big Question for Traders

Qualcomm Q4 Earnings Preview

Qualcomm might be staring down a few billion in potential losses thanks to a canceled chip design license from a certain other company.

The big day is Wednesday.

Analysts think the chip giant will report earnings per share of $2.56 on $9.9 billion in revenue.

Right now, QCOM’s implied volatility is cranked up, with an IVR (implied volatility rank) of 91.2. Buckle up!

Earnings Report Day for Qualcomm

Qualcomm (QCOM) is set to drop its fiscal Q4 earnings on Wednesday, November 6, after the closing bell. Given the market's general anxiety about AI investments, traders will likely be hanging on every word.

As a leader in the fabless semiconductor game, Qualcomm's specialty is building 5G mobile networking magic.

Back in October, the stock took a dive after Arm Holdings (ARM) canceled Qualcomm's chip design license. Apparently, there’s some serious tech company drama here. This licensing deal is critical since Qualcomm relies on Arm’s architecture for many of its chips—and without it, potential revenue loss could reach the billions.

The feud dates back to 2022, when Arm sued Qualcomm following its acquisition of Nuvia. Arm claims the deal allowed Qualcomm to use some of Arm's closely guarded tech secrets. Qualcomm has until December to respond, but the clock’s ticking, and the licensing deal is very much in jeopardy.

What Are the Analysts Saying?

Analysts are penciling in EPS of $2.56 on $9.9 billion in revenue. That’s up from Q4 2023’s $2.20 per share on $8.66 billion in revenue, so things are moving in the right direction.

Qualcomm has been on a bit of a winning streak, beating EPS estimates five out of the last five quarters (but missed on revenue once). The analyst crowd is mostly in Qualcomm’s corner, with 14 strong buys, eight buys, 15 holds, and one brave soul going with a strong sell.

The 12-month average price target sits at $209.76 a share, which would be a 27% leap from Monday’s price of $165.68. Not too shabby.

Trading Qualcomm Earnings

According to the options market, Qualcomm’s stock is bracing for a swing of +/- 12.51 points, or about 13.24%. That’s way higher than the average expected move for S&P 500 stocks, which usually hang around the 5%-10% range.

This volatility is also mirrored in Qualcomm’s IVR of 91.5, signaling some of the highest volatility levels we’ve seen in the past year.

So, with that much juice in QCOM’s options, there’s plenty of room for creative trades. Selling options might be an enticing choice here. A trader with a slightly bullish outlook could sell a put spread to ride the earnings wave. And if you think the price will stay within the expected move range, maybe consider an iron condor to squeeze out some extra premium.

But here’s the million-dollar question (drumroll, please): would you go long on Qualcomm or short?