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A strengthening recovering in the smartphone market, especially on the higher-end side, and continued strength in the automotive business helped Qualcomm (QCOM) handily beat 4Q24 EPS and revenue expectations. The semiconductor company also appears to be capitalizing on AI-related growth catalysts in a more meaningful way, such as the launch of Gen-AI enabled PCs and laptops, via its Snapdragon 8 series chips. With solid momentum across its three business lines -- Handsets, IoT, and Automotive -- QCOM provided a bullish outlook for 1Q25 as its EPS and revenue forecast were both above expectations, based on the midpoint of the guidance ranges.

• QCOM's growth strategy revolves around diversifying its end markets and revenue streams, but the handset market still accounts for approximately 60% of its total revenue. In Q4, handset revenue grew by 12% yr/yr to $6.09 bln, matching last quarter's growth rate, reflecting a rebounding smartphone market. Working in QCOM's favor is the fact that it skews towards the premium end of the smartphone market, including in China, its largest market. On that note, Android revenue grew by over 20%, driven by the company's premium-tier Snapdragon 8 Elite platform.
• For 1Q25, QCOM is forecasting growth to slow in handsets, projecting a mid-single-digit revenue increase. However, China is expected to remain a source of strength with revenue from Chinese OEMs jumping by 40% sequentially. 
• The biggest turnaround occurred in QCOM's IoT business, which generated revenue growth of 22% to $1.68 bln, after posting yr/yr declines in each of the prior three quarters in FY24. IoT had been bogged down by a stubborn inventory glut across its OEM customers, but strengthening demand for AI-enabled PCs has pulled IoT out of its slump. During the earnings call, CEO Cristiano Amon noted that QCOM has expanded on its Snapdragon X series with the launch of Snapdragon X Plus 8-core platform, enabling OEMs to offer thinner and lighter Copilot+ PCs. Overall, QCOM now has a total of 58 platforms launched or in development across its X Series lineup.
• Turing to Automotive, the strong momentum continues as revenue jumped by 68% yr/yr to $899 mln, with another 50% increase forecasted for 1Q25. This growth is being fueled by the emergence of ADAS and self-driving technologies. To that end, QCOM recently launched the Snapdragon Cockpit Elite and Snapdragon Ride Elite platforms, which are being developed for assisted driving functionalities. 

The main takeaway is that QCOM's diversification strategy paid big dividends in Q4 as each of its businesses delivered solid growth. Longer-term risks do remain, most notably including the expected loss of Apple (AAPL) as a customer as the iPhone maker moves to its own chips, but QCOM's expanding presence in the PC/laptop market should help to provide a buffer, especially if a strong PC upgrade cycle ensues with the launch of new AI features.