On Wednesday, Qualcomm Incorporated ( QCOM ) issued its fiscal fourth quarter results, surpassing Wall Street estimates on both revenue and earnings fronts, fueled by a wave of launches of flagship Chinese smartphones.

With its fortunes have been historically tied to the smartphone industry, Qualcomm ( QCOM ) continues its efforts to transform into an AI-era ready connected computing company. While it sells modems and related chips to Apple Inc ( AAPL ) for its iPhones, this revenue stream is about to start fading. While Qualcomm ( QCOM ) closed a deal with Apple ( AAPL ) to keep selling chips by at least 2026, Apple ( AAPL ) is working on its own chips. Therefore, all eyes are on Qualcomm's ( QCOM ) diversificiation efforts to evaluate their chances of ofsetting the decline from losing Apple ( AAPL ). Qualcomm ( QCOM ) has also made some serious moves to position itself in the AI landscape, having developed smartphone chips with specialized parts for machine learning since 2017. But unlike the AI leader, Nvidia Corporation ( NVDA )   Qualcomm ( QCOM ) does not produce the kind of graphics processors for data centers that are used for big AI programs like Microsoft Corporation ( MSFT ) -backed OpenAI's ChatGPT. Moreover, Qualcomm's ( QCOM ) "internet of things" business includes both chips for industrial purposes as well as the chips Meta Platforms ( META ) uses in its Quest handsets and Ray-Ban Smart Glasses, along with a new business selling chips for laptops running Microsoft ( MSFT ) Windows. 

Fiscal Fourth Quarter Highlights

For the quarter ended on September 29th, revenue grew 19% YoY to  $10.24 billion surpassed LSEG's estimate of $9.90 billion. Net income, $2.92 billion or $2.59 per share, which is almost double compared to last year's $1.49 billion, or $1.23 per share. Adjusted earnings per share of $2.69 also topped LSEG's estimate of $2.56 per share.  

Qualcomm's ( QCOM ) diversification efforts continue.

The IoT division reported revenue grew 22% YoY to $1.68 billion in revenue. The chip business that covers its handset, automotive, and other chips, grouped as QCT, reported sales growth of 18% as it brought in $7.37 billion. Its profitable technology licensing business, QTL, reported revenue grew as much as 21% YoY to $1.52 billion. Its  automotive business grew 86% YoY as it brought in sales of $899 million.

For the full fiscal year, Qualcomm ( QCOM ) reported total revenue grew 9% YoY to $33.19 billion, with 46% of its revenue being from customers with headquarters in China.

Qualcomm ( QCOM ) is off to a strong December quarter.

For the current quarter, Qualcomm ( QCOM ) guided for a revenue range between $10.5 billion and $11.3 billion, with automotive sales expected to rise 50% YoY.

Led by CEO Cristiano Amon, Qualcomm ( QCOM ) has diversified away from being merely a smartphone supplier and expanded its scope by producing chips for PCs, cars, and industrial machines. For now, it seems to be doing a good job at getting ready for the moment Apple ( AAPL ) will no longer need its chips.

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