Qualcomm’s Disappointing Outlook Stokes Worries About a Global Memory Shortage. The Stock Is Tumbling

Qualcomm’s stock is getting hammered amid worries about a worsening memory shortage.

Shares of Qualcomm (QCOM) plunged over 9% in recent trading after the chipmaker gave a disappointing outlook for the current quarter, and pointed to a tightening supply of memory components that’s impacting the smartphone market.

Qualcomm, which makes processors that are used in smartphones, laptops, and cars, said it expects a weaker smartphone market in the short term as companies navigate a global memory shortage that’s expected to drive phone and laptop prices higher.

For the second quarter, Qualcomm said it expects $10.2 billion to $11 billion in sales along with adjusted EPS of $2.45 to $2.65. Analysts surveyed by Visible Alpha had been looking for adjusted EPS of $2.88 on sales of $11.15 billion.

Still, CEO Cristiano Amon said the company is encouraged by consumer demand for high-end smartphones, and that Qualcomm is on track to reach its long-term revenue goals.

HSBC analysts said after the results that it is “difficult to forecast a potential bottom or recovery” for the smartphone market, as the memory shortage could remain a headwind through this year. The analysts kept their “hold” rating for Qualcomm shares and trimmed their price target to $150 from $170. JPMorgan analysts also cut their target, to $185 from $195.

Qualcomm’s fiscal first-quarter sales grew 5% year-over-year to $12.25 billion while adjusted earnings per share rose 9 cents to $3.50. Both figures topped estimates compiled by Visible Alpha.

With Thursday’s drop, Qualcomm shares have lost about a fifth of their value since the start of the year.