Qualcomm and Arm Earnings Drag Semiconductor Stocks Lower as Smartphone Weakness Weighs

Shares of Qualcomm and Arm Holdings slid on November 5 after both chipmakers reported quarterly results the previous evening that disappointed investors on the margins most watched by Wall Street, pulling Asian semiconductor stocks lower in sympathy and setting a cautious tone for broader chip-sector trading.

Qualcomm posted fiscal fourth-quarter non-GAAP revenue of $10.4 billion and earnings of $2.17 per share, with revenue landing at the high end of its guidance range. For the fiscal first quarter, the company guided to revenue of $10.4 billion to $11.2 billion and earnings of $2.15 to $2.35 per share. Despite the in-line result, investors focused on soft chip-design margins and a disclosure that Qualcomm's share of Apple iPhone launches would be significantly lower than previously estimated, adding pressure to a handset business already under strain. Qualcomm shares fell roughly 4% on the day.

Arm Holdings reported record second-quarter revenue of $1.44 billion, up 27% year over year and its fifth consecutive quarter of growth exceeding 20%. License and other revenue surged 50% to $773 million, while royalty revenue grew a more modest 8% to $670 million, with data center royalties doubling but smartphone royalties lagging. Non-GAAP earnings per share rose 33% to $0.52. Barron's framed the concern as an Apple and Android problem, with weak smartphone royalty trends clouding the near-term outlook despite strong licensing momentum as a leading indicator of future royalty growth. Arm shares fell roughly 8.6%, extending a decline that had already erased about 37% of the stock's value over the preceding month. The two reports dragged Japanese and South Korean chipmakers lower as trading opened in Asia on Thursday.

Snap also reported after the close on November 4, posting third-quarter revenue of $1.72 billion, up 14% year over year, alongside net income of $56 million and adjusted EBITDA of $383 million, but its shares tumbled on November 5 as well. Sony bucked the downbeat mood in the broader technology sector, rising on strong box-office returns from Spider-Man. AppLovin also moved higher, while Dutch Bros plunged and MercadoLibre fell on their own earnings updates. European names including Air France-KLM and Bouygues surged, offering some offset to the semiconductor-led weakness.