Qualcomm beats estimates, but softer outlook knocks shares

Quarter highlights and numbers

Qualcomm delivered adjusted earnings of 2.17 dollars per share, a tick above the 2.16 dollars LSEG consensus, on 10.44 billion dollars in adjusted revenue. Companywide adjusted revenue fell 7% from a year earlier.

Smartphones still supply most of its chip sales through system on chips and modems, and that category remains choppy as rising memory bills push phone makers to hike prices, denting demand. Handset chip revenue dropped 26% to 5.14 billion dollars, short of the 5.21 billion dollars StreetAccount estimate. The company raised prices in September, said it is seeing sequential improvement in handsets, and noted Android shipments in China have bottomed. It still expects the overall handset market to be flat in 2027.

Automotive was a bright spot, with revenue up 89% year over year to 1.99 billion dollars, ahead of the 1.66 billion dollars StreetAccount estimate. IoT, which covers low power chips, smart glasses SoCs, laptop chips, and a push into cellular infrastructure, grew 4% to 1.88 billion dollars, slightly above estimates. Earlier on Wednesday, Qualcomm disclosed a new agreement under which it will provide technology for SpaceX's cellular buildout.

Earnings surprises remind investors that the right tools can sharpen decision making. We're hosting our first ever investor livestream on 11/17 to show you how to use ChatGPT and Claude to invest like a pro, hosted by Briefs Finance CEO Jaspreet Singh. Save your seat.

QTL, the licensing arm for 5G and other technologies, generated 1.3 billion dollars, down 7% and in line with StreetAccount. During the quarter, Qualcomm finalized renewals of its licensing deals with Apple, Huawei, and Transsion. "QTL will maintain its scale going forward," CEO Cristiano Amon said.

Data center and guidance

Qualcomm is pushing into AI data center infrastructure. It recorded 650 million dollars in data center revenue in the quarter, which Amon said largely came from customization and connectivity work. He also said the company is targeting about 5 billion dollars of data center revenue in fiscal 2027, has secured an optical connectivity customer, and is now working with a global hyperscaler. "We don't have a demand issue; it's a supply issue," Amon said. "If I had more supply, I would probably be doing better."

For the current quarter, Qualcomm projected EPS between 2.15 and 2.35 dollars and revenue of 10.4 to 11.2 billion dollars. Analysts were at 2.27 dollars and 10.48 billion dollars.

Management view and what this means for your portfolio

The outlook came in lighter than Wall Street hoped, and the stock fell 6% after hours. The business mix is shifting, though: phones are soft but stabilizing, while automotive and data center are expanding from smaller bases. The bottom line: near term results may be uneven, with more upside tied to execution in vehicles and AI infrastructure.

Markets often reward those who combine curiosity with smart, timely information and tools. On 11/17, our CEO Jaspreet Singh goes live for our first ever investor livestream on how to use ChatGPT and Claude to invest like a pro. Register to join him.