Semis · $QCOM
Qualcomm Slides After Hours as Handset Sales Fall 26% and Memory Costs Cloud the Outlook Despite Data Center Push
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Adjusted results topped estimates, but weaker phone-chip revenue and a slightly light earnings forecast weighed on the shares.
By Emmanuel Cruz ·
Qualcomm shares fell in extended trading on Wednesday after the chipmaker reported smartphone-chip revenue that missed analyst expectations and gave a first-quarter earnings forecast whose midpoint was a touch below consensus. The stock dropped more than 6% after hours, Reuters reported, while The Elec put the decline at more than 8% [2][3].
For its fiscal fourth quarter, which ended September 27, Qualcomm reported non-GAAP revenue of $10.44 billion, down 7% from a year earlier, and non-GAAP earnings of $2.17 per share, down from $3.00 [1]. Reuters said analysts polled by Visible Alpha expected adjusted sales of $10.11 billion and earnings of $2.16 per share, so both measures edged past estimates [2].
The weak spot was handsets. Revenue from phone chips fell 26% to $5.14 billion, below the $5.25 billion analysts expected, and the broader chip division declined 8% to $9.02 billion [1][2]. Reuters cited Counterpoint Research as saying global smartphone shipments fell 20% in the September quarter, a 14-year low, with higher memory-chip prices, driven by demand from AI data centers, pushing up device prices [2]. Investors were also concerned about Apple's shift toward its own modem chips and a faster-than-expected drop in iPhone-related sales, and Qualcomm's forecast includes no further Apple revenue [2].
Outside phones, results were stronger. Automotive revenue jumped 89% to $1.99 billion and Internet of Things revenue rose 4% to $1.89 billion, while licensing revenue fell 7% to $1.30 billion [1]. Chief Executive Cristiano Amon said, "Fiscal 2027 marks the start of our non-handset revenue inflection" [1]. He also told analysts that Android handset sales have bottomed and are growing again from quarter to quarter, Reuters reported [2].
The company guided first-quarter revenue to $10.4 billion to $11.2 billion and non-GAAP earnings to $2.15 to $2.35 per share [1]. Reuters noted the revenue midpoint was above the $10.48 billion estimate, but the $2.25 earnings midpoint fell slightly short of the $2.27 consensus [2]. The Elec attributed the after-hours drop to that earnings shortfall [3]. Chief Financial Officer Akash Palkhiwala expects gross margin to return to its historical 48% to 50% range by the second quarter as chip price increases take effect [2].
Data centers are the growth story the company is leaning on. Qualcomm expects about $650 million of data-center revenue in the December quarter, above the $539.1 million analysts anticipated, according to Reuters, which also cited a September agreement allowing Amazon to buy up to $60 billion of Qualcomm AI chips and related products, and a target of $15 billion in annual data-center sales by fiscal 2029 [2]. The company also signed a multi-year 5G supply deal tied to SpaceX's planned Starlink Mobile network, starting in 2027 [2].
Qualcomm returned about $2.0 billion to shareholders in the quarter, split between $1.01 billion of share repurchases and a $0.92-per-share dividend totaling $987 million [1].
What to watch: whether the stock's after-hours drop holds at Thursday's open, how memory pricing affects handset demand through the holiday quarter, and whether the data-center ramp arrives on the timeline management has laid out. The move also lands on a day when Asian chip shares are under pressure.
Sources:
[1] Qualcomm, "Qualcomm Announces Fourth Quarter and Fiscal 2026 Results", November 4, 2026. https://s204.q4cdn.com/645488518/files/content_files/FY2026-4th-Quarter-Earnings-Release.pdf
[2] Reuters (via KELO), "Qualcomm shares slide as smartphone weakness clouds growth push", November 4, 2026. https://kelo.com/2026/11/04/qualcomms-smartphone-chip-sales-miss-estimates-shares-fall/
[3] The Elec, "Qualcomm's Fourth-Quarter Revenue Beats Estimates, Growth Expected in 2027", November 5, 2026. https://www.thelec.net/news/articleView.html?idxno=15303
This article was produced with AI assistance. It is for informational purposes only and is not financial advice. StockVolt and its authors may hold positions in securities mentioned.