Qualcomm and Arm Holdings to Report Earnings: Can They Boost the Chip Sector?

Their announcements are coming on the heels of the DeepSeek disruption

• Qualcomm and ARM are scheduled to report earnings on Wednesday, Feb. 5, after the market close.
• Earnings from both companies have the potential to sway broader market sentiment, especially in chip-heavy exchange-traded funds like SMH.
• QCOM and ARM see expected moves of +/- 11 and +/- 16 points, respectively.

Qualcomm (QCOM) and Arm Holdings (ARM) are scheduled to report earnings on Wednesday, Feb. 5, after the market close.

Together the two chip makers command $360 billion worth of market capitalization. Their earnings will have a lot of influence on the broader market, especially chip-heavy exchange traded funds (ETFs) like SMH—the VanEck Semiconductor ETF.

The earnings come after DeepSeek-R1, an open-source artificial intelligence model from China, caused a recalibration in the way markets think about spending on AI. R1 can operate on a reduced hardware loadout, which means fewer chips may be needed for AI.

Qualcomm is one of the top fabless semiconductor producers, with application not only for AI but also for automotive and mobile applications.

Arm’s royalties will be key to its growth because the company produces most of its revenue from royalties from its chip architecture designs. However, AI demand will be in focus as well because its technology is heavily incorporated into AI hardware.

What do investors expect?

Analysts anticipate Qualcomm’s earnings per share (EPS) will cross the wires at $2.96 on $10.9 billion in revenue. That would compare to a year ago when QCOM posted EPS of $2.75 on $9.92 billion in revenue.

Analysts are neutral to bullish on QCOM, with 22 strong buy and buy ratings and 18 hold ratings. There’s only one sell rating on the stock. The average one-year price target was 199.72, about 15% above Tuesday’s stock price.

ARM is expected to post EPS of $0.34 on $949.3 million in revenue, compared to a year ago when EPS was at $0.29 and $824 million in revenue.

Ratings on ARM are also bullish to neutral, with 25 strong buy and buy ratings and 13 hold ratings. There are 4 strong sell and sell ratings on the stock. The average one-year price target was 151.75, or about 7% below Tuesday’s trading price.

Trading Qualcomm earnings

QCOM traded with an implied volatility rank (IVR) of 59, meaning volatility is modestly elevated compared to the past 12 months of trading. The options market expects an implied move of +/- 11 points, or 6.4% of Tuesday’s stock price.

January was strong for QCOM, with the stock price gaining 12.57% in the month. That was the best monthly performance since May 2024. If the company delivers a rosy report, the stock could rally and target the recent swing high from November at 182.10, which could offer some resistance. Alternatively, a disappointing report could send prices down toward levels traded in December when it traded at a multi-month low.

Trading Arm Holdings earnings

ARM traded with an IVR of 22, meaning volatility is subdued compared to the past 12 months of trading. However, the near-term expirations, such as the Feb. 5 strike, show an expected move of +/- 15.87 points, or 9.7%, which is a larger expected move than QCOM has priced in. This makes the IVR somewhat deceptive in this case because there is still plenty of premium across the chain.

ARM performed exceptionally well in January, rising about 29.3%, its best performance since June. An above-estimates earnings report may revive the recent gains and push prices toward the January swing high.

Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. #@fxwestwater

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