QUALCOMM Incorporated

(NASDAQ Global Select)
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Somewhat Bearish -45

Qualcomm Falls 6% as Chip Costs Cut Margins [2026]

Company update Earnings report Guidance lowered AI-generated analysis

πŸ“‰ Qualcomm shares fell over 6% after Q4 results met profit targets but guidance revealed rising supply costs squeezing margins.

πŸ’° Adjusted revenue dropped 7% year-over-year to $10.44 billion, while adjusted earnings of $2.17 per share narrowly beat the $2.16 consensus.

πŸ“‰ The company guided for Q1 fiscal 2027 earnings between $2.15 and $2.35 per share, with a midpoint of $2.25 missing analyst expectations of $2.27.

πŸ“‰ Operating margin guidance for the chip-design segment is set at 20% to 22%, down from the 24% realized in the fourth quarter.

🏭 CEO Cristiano Amon confirmed a supply-side constraint, stating that more supply would likely improve results despite broad-based input cost increases.

πŸ’Έ Rising costs span wafer fabrication, assembly, testing, advanced packaging, and memory, affecting nearly every stage of chip production.

πŸ“ˆ Qualcomm is raising product prices to offset costs, but expects the full benefit to impact the bottom line only in the second half of fiscal 2027.

⚠️ The wide guidance ranges on both revenue and earnings signal significant uncertainty regarding supply availability and cost pass-through capabilities.

Bullish Signals
  • Adjusted earnings of $2.17 per share beat the analyst consensus of $2.16, demonstrating operational resilience despite a 7% decline in revenue.
  • Revenue guidance for the December quarter has a midpoint of $10.8 billion, which exceeds the $10.48 billion analysts expected, indicating strong underlying demand.
Risk Factors
  • The company expects adjusted earnings per share to miss analyst consensus by two cents in the upcoming quarter due to rising input costs.
  • Operating margin guidance for the chip-design segment is projected to fall from 24% to a range of 20%-22%, representing a significant compression.
  • CEO Cristiano Amon explicitly stated that broad-based input cost increases across the supply chain are squeezing margins, limiting profitability growth.
  • Price increases implemented by Qualcomm will not fully benefit the bottom line until the second half of fiscal 2027, leaving near-term earnings exposed to costs.
Full Analysis
Qualcomm shares dropped more than 6% in extended trading on November 4, 2026, following fourth-quarter results that met Wall Street's profit target but were accompanied by a weaker outlook for the December quarter. The company reported adjusted revenue of $10.44 billion, down 7% year over year, and adjusted earnings of $2.17 per share, slightly beating the consensus estimate of $2.16. The primary driver of the stock decline was guidance indicating rising supply costs are squeezing margins. Qualcomm expects adjusted earnings for the December quarter to range between $2.15 and $2.35 per share, with a midpoint of $2.25 that trails analyst expectations of $2.27. Additionally, the company forecasts an operating margin of 20% to 22% for its chip-design segment, a significant drop from the 24% achieved in the fourth quarter. CEO Cristiano Amon attributed the soft outlook to broad-based input cost increases across the semiconductor supply chain, including wafer fabrication, assembly, testing, advanced packaging, and memory, rather than weak customer demand. He stated that if the company had more supply, it would likely perform better, confirming that orders exist but are constrained by industry-wide cost pressures. To address the margin compression, Qualcomm announced price increases on its products. However, the company expects the full financial benefit of these pricing actions to reach the bottom line only in the second half of fiscal 2027. This lag means the December quarter and potentially the following one will carry the full cost burden with only partial relief, creating uncertainty around profitability in the near term.