Qualcomm (NASDAQ: QCOM) released their fiscal Q1 2020 earnings results today beating analyst expectations, sending the stock higher in after market trading.

Revenues for the mobile chip maker came in at $5.06 billion for the quarter, beating analyst estimates of $4.86 billion.  Sales for the quarter increased 5% compared to the same quarter last year.

The company also posted earnings of $0.99 per share which beat consensus estimates of $0.86 per share.

Our strong fiscal first quarter financial performance reflects a significant inflection point for Qualcomm as we begin to realize the benefits from the ramp of 5G.Qualcomm CEO, Steve Mollenkopf

One of the major reasons for optimism in Qualcomm is the impeding mobile device upgrade cycle expected to kick off as next generation 5G network is rolled out. Already a focus for the telecom operators like AT&T, Sprint and Verizon for building out the network, with 40% market share in smartphone applications processors, Qualcomm should be a leading indicator as they ramp up sales of 5G capable mobile chips to device manufacturers.

Qualcomm last estimated 5G device shipments for 2020 of between 175 – 225 million as of it’s last earnings report. With this latest earnings report the company held those estimates in it’s latest guidance.

Recent strong results and guidance from chip suppliers Qorvo (NASDAQ: QRVO) and Skyworks Solutions (NASDAQ: SWKS) highlighted a robust outlook for 5G smartphone launches which boded well for Qualcomm heading into this earnings report.

Qualcomm provided guidance for their fiscal Q2 2020 results, forecasting revenues of between $4.9 – $5.7 billion and non-GAAP EPS of between $0.80 – $0.95. While the market may be somewhat disappointed with the lower estimated earnings per share in Q2 compared to the earnings of $0.99 per share this quarter, consensus estimates had pegged the company at $0.87 earnings per share which is right in the middle of the guided range. Cause for the lower earnings guidance was likely due to the fact that the company forecast increases in R&D and SG&A expenses by 5% – 7% compared to this quarter. On the top line, Wall Street estimates had the Qualcomm revenue for Q2 at $5.07 billion which was in the lower end of the guided range.

Source: YCharts

Qualcomm stock had a good run in 2019, gaining 55% over the course of the year but still underperformed the PHLX semiconductor index which was up 60% over 2019. Thus far in 2020, Qualcomm stock closed today up 2.3% today in anticipation of the earnings report. The stock was also up 1% in after hours trading immediately following the release of earnings as of the time of publishing.

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