Tech News: AMD, Qualcomm Earnings, ECB Concerns & More

The tech sector is back in the spotlight this week, with key developments from major tech companies and growing concerns surrounding US-China tech bans. 

Let’s take a closer look at the latest tech news and what it could mean for your trading portfolio:

Why Did Qualcomm & AMD Fall Despite Strong Earnings?

Tech giants Qualcomm (QCOM) and AMD (AMD) traded lower this week despite reporting strong earnings, which may have confused some people.

AMD Earnings

AMD reported earnings on Tuesday, 4 February. The company reported earnings per share (EPS) of $1.09 and revenue of $7.56 billion, surpassing expectations of $1.09 EPS and $7.5 billion in revenue. 

AMD showed strong performance in its client segment, generating $2.3 billion in revenue, exceeding the expected $1.98 billion. Its gaming revenue also came in above expectations at $563 million.

Despite strong earnings, AMD's stock dropped nearly 9% (before the bell on Wednesday) due to a weak growth forecast for its data centre business, particularly in artificial intelligence (AI) chips, where it faces tough competition from Nvidia. Analysts were expecting stronger momentum in AMD's AI offerings, but the forecast fell short. AMD also faces challenges in the slowing PC market and risks from tariffs on Chinese-made goods, which could increase costs for electronics, including servers and PCs. 

Over the past year, AMD's stock dropped 33%, while Nvidia’s stock surged 80%, intensifying the competition. Intel’s stock also struggled, with a 54% decline. (Source: Yahoo Finance)

Qualcomm Earnings

Qualcomm reported earnings on Wednesday, 5 February. The report showed stronger-than-expected fiscal first-quarter results and an optimistic outlook for the current period.

For reference, some analysts had estimated an adjusted EPS of $2.96 and revenue of $10.93 billion for the quarter ending 29 December. Qualcomm reported an EPS of $3.41 and revenue of $11.67 billion, an 18% increase from the $9.92 billion revenue reported a year ago.

Additionally, the company experienced growth across its primary segments, with mobile handset sales rising 13% to $7.57 billion, automotive sales increasing by 61%, and IoT sales growing 36%. (Source: CNBC)

Despite the strong results, Qualcomm's stock traded lower in after-hours trading Wednesday. This drop may stem from concerns over potential slowing growth in key markets, particularly mobile handsets, where growth is forecasted to slow in 2025. Additionally, although the company reported robust demand from China and secured new customers like Samsung, traders may have grown wary of future competition and broader macroeconomic tensions.

It will be interesting to see how these companies will perform in the days to come and what else will be revealed in the tech sector.

Will Europe Suffer from the US-China Tech War?

The US-China tech bans may have broader implications for other economies, including the EU, as pointed out by European Central Bank (ECB) member Piero Cipollone. He expressed concern that a US-China trade war could negatively impact the eurozone, particularly if US tariffs on China result in China dumping discounted goods into Europe, which could harm growth and inflate prices. 

However, Cipollone may have downplayed the direct effects of the tariffs on Europe, suggesting that the weakening of the euro and firms absorbing additional costs could help mitigate the impact. While global trade tensions could dampen growth, Cipollone does not foresee a recession in the eurozone. He pointed to the resilience of key sectors such as labour markets, consumption, construction, and industry, all showing signs of recovery. Moreover, despite trade concerns, rising energy costs could counteract downward pressure on inflation, leading to a more balanced risk outlook for the ECB. 

Ultimately, only time will reveal what lies ahead for the eurozone.

Chinese Tech Rises on DeepSeek Optimism

While worries materialise in other countries, both China and Hong Kong stocks traded higher on Thursday, 6 February, driven by optimism around AI. 

The Shanghai Composite index rose 0.76%, reaching 3,254.12 points, and China's blue-chip CSI300 index was up 0.69%. AI-related sectors fueled gains in both onshore and offshore markets, with the CSI Semiconductor Industry Index surging 4.3% to a five-week high. The Hang Seng Index in Hong Kong was trading 0.29% higher at 20,655.94, while the Hang Seng Tech Index climbed 1% to its highest level since last October. As noted by some analysts, “DeepSeek's breakthrough is driving a renewed confidence in China's AI sector, and it will continue to be a key market theme.”

Still, the future of this Chinese AI model remains uncertain, and it is unclear whether its strong momentum will continue. 

Nvidia Regains Momentum?

This uncertainty is especially relevant given that AI leader Nvidia, which suffered losses from the emergence of DeepSeek last week, regained momentum this week, gaining 4% on Wednesday. 

This underscores the unpredictable nature of AI technology's future and the tech market in general.

Conclusion

Despite strong earnings reports from Qualcomm and AMD, their stocks traded lower this week, primarily due to concerns about future growth and increased competition. AMD’s weak forecast for its data centre and AI business, alongside challenges in the PC market, contributed to a nearly 9% drop in its stock. 

In spite of reporting strong revenue growth across various segments, Qualcomm's stock price dipped, likely driven by concerns over potential slowing growth in mobile handsets and broader market uncertainties.

Meanwhile, the global tech landscape remains unpredictable, with rising competition and macroeconomic tensions continuing to influence investor sentiment.

As we end the week, it is essential to note that past performance does not reflect future results, and more news can unfold, shifting the markets and the economic landscape.