Qualcomm Shares Fall 6% as Forecast Disappoints and Handset Chip Sales Drop 26%

For its fiscal fourth quarter, which ended in September, Qualcomm reported revenue of $10.32 billion, down 8 per cent from a year earlier, and adjusted earnings of $2.17 a share, the company said in its earnings release. Analysts polled by LSEG had expected $10.11 billion and $2.16, CNBC reported.

The weak spot was the guidance. For the first quarter of fiscal 2027, Qualcomm forecast revenue of $10.4 billion to $11.2 billion and non-GAAP earnings of $2.15 to $2.35 a share. According to CNBC, analysts had expected $2.27 a share on revenue of $10.48 billion.

Handset chip revenue fell 26 per cent to $5.137 billion. CNBC reported that this was below a StreetAccount estimate of $5.21 billion, even though Qualcomm raised prices in September. Phone makers have been raising their own prices as memory costs climb, which has cut demand. Qualcomm told analysts it is starting to see sequential growth in the category and that Android shipments in China have bottomed, CNBC reported, but the company expects the overall handset market to be flat in 2027.

The result puts more weight on chief executive Cristiano Amon's effort to make Qualcomm less dependent on phones. "Fiscal 2027 marks the start of our non-handset revenue inflection, including the ramp of our Data Center business," Amon said in the release. The company forecast that non-handset revenue will grow by more than 60 per cent in fiscal 2027, reiterated its target of $5 billion in data centre revenue for that year, and announced a multi-generational collaboration with Amazon on AI data centre products.

According to CNBC, Amon said the data centre business brought in $650 million in the quarter, mostly from custom chip and connectivity work, and that Qualcomm recently signed a customer for optical connectivity and had engaged a global hyperscaler. "We don't have a demand issue; it's a supply issue," he said. "If I had more supply, I would probably be doing better."

Automotive was the strongest unit. Revenue rose 89 per cent to $1.99 billion, ahead of the $1.66 billion StreetAccount estimate cited by CNBC. Internet of things revenue, which covers laptop, smart-glasses and other low-power chips, rose 4 per cent to $1.888 billion. Earlier on Wednesday Qualcomm announced a deal to supply technology for SpaceX's cellular network, CNBC reported.

Licensing revenue from the QTL division fell 7 per cent to $1.304 billion. Qualcomm said it had renewed long-term licence agreements with Apple, Huawei and Transsion during the quarter.

GAAP net income was $1.251 billion, against a loss of $3.117 billion a year earlier. For fiscal 2026 as a whole, revenue fell 3 per cent to $43.12 billion. GAAP earnings of $12.70 a share include a $5.7 billion tax benefit from the release of a valuation allowance, and non-GAAP earnings were $10.54 a share. Qualcomm returned $11.67 billion to shareholders over the year, including $7.82 billion in share buybacks.

The guidance range for the December quarter includes the first full period of the data centre ramp Amon described. The $5 billion target for the fiscal year is now the main figure against which investors will measure whether Qualcomm's diversification is working.