Qualcomm Beats Q4 Estimates but Issues Lighter-Than-Expected Guidance as Handset Weakness Persists, Automotive Surges

Qualcomm topped Wall Street's profit and revenue targets for its fiscal fourth quarter, but a softer-than-expected earnings forecast for the current period sent shares lower in extended trading, according to CNBC. The report underscores a widening split inside the chipmaker's business: persistent weakness in smartphone chips is being offset, though not fully, by record growth in automotive revenue.

Quarterly Results Beat Estimates, But Guidance Disappoints

Qualcomm posted adjusted earnings per share of $2.17, versus the $2.16 LSEG consensus estimate, on adjusted revenue of $10.44 billion, CNBC reported. The company's official fourth-quarter earnings release, filed with its results, shows adjusted revenue of $10,442 million, down 7% from $11,270 million a year earlier, while GAAP revenue for the quarter came in at $10,322 million, an 8% decline. Despite clearing the consensus bar, Qualcomm's forecast for the current quarter fell short of expectations, and shares slid 6% in extended trading following the release, according to CNBC.

For the full fiscal year 2026, Qualcomm reported GAAP revenues of $43.1 billion, GAAP EPS of $12.70 and non-GAAP EPS of $10.54, per the company's earnings release.

Handset Weakness Tied to Memory Cost Pressures

The bulk of the quarter's revenue decline traced back to smartphone chips. Handset chip sales fell 26% year over year to $5.14 billion, missing a StreetAccount estimate of $5.21 billion, CNBC reported; Qualcomm's own filing lists the figure at $5,137 million, down from $6,961 million a year earlier. CNBC characterized the segment as driving most of the company's overall revenue decline.

CNBC reported that the handset market is currently in turmoil as rising memory costs have forced handset makers to raise prices, in turn hurting demand, and that Qualcomm itself raised its own prices in September. Qualcomm's earnings release echoes this dynamic at the industry level, stating that the semiconductor industry is experiencing a broad-based increase in input costs across wafer fabrication, assembly, test, advanced packaging, memory and other materials. The company said it is taking pricing actions in response but does not expect the full margin benefit to show up in its QCT chip division's gross margins until the second half of fiscal 2027.

Still, Qualcomm pointed to early signs of stabilization. CNBC reported that the company is starting to see sequential growth in the handset category and that Android shipments in China have bottomed, even as Qualcomm continues to forecast a flat overall handset market in 2027.

Analytical interpretation: Taken together, these disclosures suggest the memory-driven cost shock is less a demand-destruction story than a pricing-pass-through story moving through the supply chain with a lag. If that reading holds, the margin drag Qualcomm is flagging for the first half of fiscal 2027 would be a transitional cost issue rather than a structural decline in handset chip demand, though this remains a company characterization rather than an independently confirmed trend.

Automotive and IoT Growth Offsets Handset Decline

Automotive was the standout performer. Revenue in that division soared 89% year over year to $1.99 billion, beating a StreetAccount estimate of $1.66 billion, CNBC reported. Qualcomm's earnings release lists the figure at $1,990 million, up from $1,053 million, and notes it marked the automotive division's first $2 billion quarter. IoT revenue grew a more modest 4% to $1,888 million from $1,807 million, per the same release.

Using the exact segment figures from Qualcomm's earnings release, our calculation shows handset revenue fell by $1,824 million year over year ($6,961 million minus $5,137 million), while automotive revenue rose by $937 million ($1,990 million minus $1,053 million) and IoT rose by $81 million ($1,888 million minus $1,807 million). Combined, automotive and IoT growth of $1,018 million offset roughly 56% of the handset decline within the QCT chip segment, leaving a net QCT revenue drop of about $806 million year over year ($9,015 million versus $9,821 million, based on the three reported segment totals).

Qualcomm's earnings release quotes CEO Cristiano Amon citing 36% year-over-year growth in combined QCT Automotive and IoT revenues for the quarter, and he projected non-handset revenues will grow more than 60% year over year in fiscal 2027.

Data Center Ambitions Remain Supply-Constrained

Qualcomm generated $650 million in data center revenue during the quarter, mostly from customization and connectivity work, Amon said, according to CNBC. He reiterated an expectation of $5 billion in data center revenue in fiscal 2027, a target also referenced in the company's earnings release. Amon framed the near-term ceiling as a capacity issue rather than a sales problem: "We don't have a demand issue; it's a supply issue," he said in remarks reported by CNBC. "If I had more supply, I would probably be doing better."

Bottom Line

Qualcomm's fourth quarter captured a company in transition: a legacy handset chip business working through memory-driven cost and pricing friction, alongside an automotive unit that just posted its first $2 billion quarter and a nascent data center effort the company says is limited by supply rather than customer interest. The lighter-than-expected guidance that followed a headline beat, together with the 6% after-hours share decline reported by CNBC, suggests investors are weighing near-term margin pressure from input costs against management's longer-run projection that automotive, IoT and data center revenue can increasingly offset a maturing smartphone chip franchise.