Qualcomm released quarterly results on Wednesday that surpassed Wall Street consensus estimates on earnings and revenue, but the company’s forward guidance disappointed investors, resulting in a 7% stock decline in extended trading.
For the upcoming quarter, Qualcomm projected earnings per share between $2.15 and $2.35 on revenue of $10.4 billion to $11.2 billion, falling short of analyst expectations of $2.27 per share on $10.48 billion in revenue. The company’s handset chip division, which represents a significant portion of its business, faced headwinds during the period as rising memory costs prompted device manufacturers to increase prices and consumers pulled back on purchases. Adjusted revenue declined 7% compared to the prior year period. Despite raising prices in September, handset chip sales dropped 26% to $5.14 billion, undershooting a StreetAccount estimate of $5.21 billion. Management indicated early signs of sequential growth in the category and noted that Android shipments in China appear to have stabilized, though the company anticipates a flat handset market in 2027.
Under CEO Cristiano Amon’s leadership, Qualcomm has pursued diversification into higher-margin segments. The data center division generated $650 million in quarterly revenue, primarily from customization and connectivity services. Amon announced the company projects $5 billion in data center revenue for fiscal 2027 and recently secured a customer for optical connectivity while engaging a major global hyperscaler. Automotive revenue surged 89% year-over-year to $1.99 billion, surpassing expectations of $1.66 billion. Internet of Things revenue, which includes low-power chips, smart glasses systems, and laptop processors alongside cellular infrastructure efforts, increased 4% to $1.88 billion, slightly above estimates. Earlier in the day, Qualcomm announced a technology agreement with SpaceX for cellular expansion.
The QTL licensing division, which generates revenue from intellectual property licensing for 5G and other technologies, reported a 7% revenue decline to $1.3 billion, meeting StreetAccount projections. The division benefited from renewed licensing agreements with Apple, Huawei, and Transsion.
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