Qualcomm reported quarterly results on Wednesday that exceeded Wall Street consensus estimates, but the company’s forward guidance fell short of analyst expectations, prompting a 7% decline in the stock during extended trading.
The chipmaker provided current-quarter guidance of earnings per share between $2.15 and $2.35 on revenue of $10.4 billion to $11.2 billion. Wall Street had anticipated earnings per share of $2.27 on revenue of $10.48 billion. The shortfall in guidance, despite beating current-quarter results, drove investor concern about the company’s near-term prospects.
Qualcomm’s smartphone chip business, which represents the bulk of its revenue, faces significant headwinds. Rising memory costs have compelled handset manufacturers to increase prices, dampening consumer demand. The division’s quarterly revenue fell 26% to $5.14 billion, trailing StreetAccount estimates of $5.21 billion. Company-wide adjusted revenue declined 7% year-over-year. However, management indicated that sequential growth was beginning in the handset category and that Android shipments in China had stabilized, though the company predicted the overall handset market would remain flat in 2027.
Management is working to diversify revenue streams away from smartphones. The data center segment generated $650 million during the quarter, primarily from customization and connectivity services. CEO Cristiano Amon stated that Qualcomm expects $5 billion in data center revenue in fiscal 2027, supported by recent customer wins including optical connectivity agreements and engagement with a major hyperscaler. The automotive division delivered stronger results, with revenue surging 89% year-over-year to $1.99 billion, exceeding StreetAccount expectations of $1.66 billion. Internet of things revenue increased 4% to $1.88 billion. The intellectual property licensing division, which generated $1.3 billion, remained essentially flat with estimates despite a 7% annual decline.
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