Qualcomm Shares Fall 6% as Weak Forecast and Memory Costs Pressure Phone Sales

Qualcomm shares fell 6% in extended trading after the chipmaker reported quarterly results that narrowly exceeded Wall Street’s earnings estimate but issued a weaker-than-expected forecast. Revenue was $10.44 billion, while adjusted earnings per share came in at $2.17, compared with analysts’ estimate of $2.16.

For the current quarter, Qualcomm expects adjusted earnings per share of $2.15 to $2.35 and revenue of $10.4 billion to $11.2 billion. Analysts had forecast earnings of $2.27 per share and revenue of $10.48 billion.

Rising memory costs are putting pressure on smartphone makers, which have been raising prices and facing weaker demand. Qualcomm said adjusted revenue fell 7% from a year earlier. Its handset chip sales declined 26% to $5.14 billion, below StreetAccount’s estimate of $5.21 billion, despite a price increase in September.

The company said it is beginning to see sequential growth in handset chips and that Android shipments in China have reached a bottom. However, Qualcomm expects the handset market to remain flat in 2027.

Qualcomm is also seeking to expand beyond smartphones, including in AI data center infrastructure. It reported $650 million in data center revenue for the quarter, mostly from customization and connectivity work. CEO Cristiano Amon said the company expects $5 billion in data center revenue in fiscal 2027 and recently signed a customer for optical connectivity, while also engaging with a global hyperscaler. He described supply, rather than demand, as the constraint on the business.

Automotive revenue rose 89% year over year to $1.99 billion, exceeding StreetAccount’s estimate of $1.66 billion. Internet of Things revenue increased 4% to $1.88 billion, slightly above estimates. The segment includes low-power chips, smart-glasses and laptop processors, as well as cellular infrastructure; Qualcomm announced a technology deal related to SpaceX’s cellular buildout on Wednesday.

Revenue from Qualcomm’s QTL licensing division fell 7% to $1.3 billion, in line with expectations. The company said it renewed licensing agreements with Apple, Huawei and Transsion during the quarter. Amon said QTL would maintain its scale.

Sources: CNBC Markets.