QUALCOMM Incorporated

(NASDAQ Global Select)
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Bullish +55

Qualcomm stock weighs handset slump against auto and data-center growth

Company update Earnings report Financial outlook AI-generated analysis

πŸ“‰ Qualcomm QCT handset revenue fell 8% year over year to $9.02 billion, with handset-specific sales dropping 26% due to weak demand.

πŸš— Automotive revenue reached a record $1.99 billion, representing an 89% increase from the prior year.

πŸ’» Data-center revenue is expected to exceed $650 million in the December quarter as custom silicon shipments ramp up.

πŸ“ˆ Management targets non-handset revenue growth of more than 60% during fiscal 2027.

πŸ’° The company posted adjusted earnings of $2.17 per share, beating analyst expectations of approximately $2.16.

πŸ“‰ Total QCT revenue declined 3% year over year to $37.21 billion for the full fiscal year.

⚠️ Rising semiconductor input costs, including memory and advanced packaging, are adding pressure to profitability.

🎯 First fiscal quarter guidance includes revenue of $10.4 billion to $11.2 billion.

πŸ“‰ The QCT segment's earnings-before-tax margin narrowed from 30% to 27% for the full fiscal year.

πŸš€ IoT revenue increased 4% to $1.89 billion, contributing to overall non-handset growth.

Bullish Signals
  • Automotive revenue surged 89% to a record $1.99 billion, serving as a strong counterweight to handset declines.
  • The company beat adjusted earnings expectations with $2.17 per share versus the anticipated $2.16.
  • Data-center revenue is projected to exceed $650 million in the December quarter as custom silicon ramps.
  • Management reaffirmed a target of $5 billion in data-center revenue for fiscal 2027.
  • IoT revenue grew 4% year over year to $1.89 billion, adding to non-handset diversification efforts.
Risk Factors
  • Handset revenue fell 26% year over year to $5.14 billion due to weaker smartphone demand and memory constraints.
  • The QCT segment's earnings-before-tax margin narrowed from 30% to 27% for the full fiscal year.
  • Total QCT revenue declined 8% year over year, leaving investors concerned about replacing lost volume.
  • Full-year handset revenue fell 13% to $24.07 billion as the smartphone business contracts.
  • Rising semiconductor input costs, including memory and advanced packaging, are adding pressure to profitability.
Full Analysis
Qualcomm reported mixed fiscal fourth-quarter results, posting an adjusted earnings beat of $2.17 per share against analyst expectations while revenue slightly exceeded forecasts at $10.32 billion. The company's investment case now hinges on its aggressive diversification strategy as it navigates a significant downturn in its core smartphone business. Handset revenue faced substantial headwinds, with QCT segment revenue falling 8% year over year to $9.02 billion and handset-specific revenue dropping 26% to $5.14 billion due to weaker demand and memory constraints. Consequently, the full-year handset revenue declined 13%, narrowing the segment's earnings-before-tax margin from 30% to 27%. Automotive and data-center segments provided strong counterweights to the smartphone decline. Automotive revenue surged 89% to a record $1.99 billion, while IoT revenue grew 4%. Management targets non-handset revenue growth exceeding 60% in fiscal 2027, with data-center revenue expected to surpass $650 million in the December quarter as custom silicon ramps up. Looking ahead, Qualcomm guided for first fiscal quarter revenue between $10.4 billion and $11.2 billion, though the earnings midpoint was below expectations due to rising input costs. The stock's near-term outlook depends on whether high-growth non-handset businesses can expand fast enough to offset the continued contraction in the smartphone market.