Investing.com -- Qualcomm has reported fiscal first-quarter results that topped Wall Street estimates as a recovery in smartphone demand boosted handset chip sales, but investors were wary of signs of weakness in the artificial intelligence chipmaker's key Chinese market.
Shares in California-based Qualcomm (NASDAQ:QCOM) were lower in premarket trading in New York on Thursday, after they swung between gains and losses in after-hours dealmaking.
Qualcomm posted adjusted earnings per share (EPS) of $2.75 on revenue of $9.92 billion, beating projections of $2.37 and $9.49B, according to an Investing.com forecast based on a poll of analysts.
Driving the beat was a 16% jump in handset chip sales versus the year-ago period to $6.69B. Handset revenue had slipped by 27% year-on-year in the prior quarter.
Meanwhile, automotive chip sales in the three months ended on Dec. 24 also climbed by just under a third to $598 million, although revenue from Qualcomm's Internet-of-Things unit slumped by 32% to $1.14B.
Executives told analysts in a post-earnings call that sales were boosted by "healthy" demand for new semiconductors for Android phones, reflecting a "stabilization" in global demand for handsets. But investors took particular note of Qualcomm's prediction that chip revenue in China will be flat in its fiscal second quarter. Analysts interpreted the comment as a possible sign that the business may be losing market share in one of its most important markets.
Adjusted EPS for the current quarter ending in March was forecast to come in at a range of $2.20 to $2.40 on revenue of $8.9B to $9.7B. Wall Street estimates had called for profit and revenue guidance of $2.25 and $9.28B.
"Qualcomm had solid upside on profitability in the December and March quarters, with revenue trends largely as expected. With
some market share headwinds, we see limited growth potential [in the] intermediate term," analysts at Morgan Stanley said in a note to clients.
Yasin Ebrahim contributed to this report.