Qualcomm shares tumbled Thursday after its outlook for the current quarter missed Wall Street's projections.

The chipmaker said an ongoing memory chip shortage is expected to impact sales of smartphones, which it makes processors for.

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.

Booming demand for AI hardware, and moves by the largest memory makers to focus more of their sales on AI customers, is squeezing supply for consumer-focused devices like phones and computers. That's helped boost shares of memory makers such as Micron and Sandisk in recent months, and added pressure on companies that buy memory parts.

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.

Read the original article on Investopedia