Qualcomm Earnings Beat, Guidance Slips on Memory Crunch
Qualcomm earnings beat estimates but guidance was cut on memory-chip shortages, refocusing investors on data-center shipments and automotive growth.
KEY TAKEAWAYS
- Qualcomm topped fiscal quarter expectations while trimming next quarter guidance for supply driven handset weakness.
- Management blamed memory chip shortages and OEM inventory drawdowns for the softer guidance.
- Data center chip shipments and accelerating automotive revenue were highlighted as offsets to handset weakness.
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Qualcomm Inc. (QCOM) reported fiscal second-quarter 2026 results on April 29 after market close. The company’s adjusted earnings per share topped expectations even as it trimmed third-quarter guidance due to memory-chip shortages. CEO Cristiano Amon said Qualcomm expects to begin shipping data-center chips to a large hyperscaler in the December 2026 quarter.
Quarter Results and Shareholder Returns
Qualcomm’s fiscal second-quarter revenue totaled $10.6 billion, down 3% year over year and roughly matching estimates. Chip sales at the Qualcomm CDMA Technologies (QCT) unit declined 4% to about $9.1 billion, while licensing revenue rose 5%.
Non-GAAP diluted earnings per share reached $2.65, beating consensus forecasts. On a GAAP basis, net income rose to about $7.4 billion, boosted by a one-time $5.7 billion tax benefit from releasing a U.S. deferred-tax valuation allowance. Gross margin slipped to 54% from the prior year.
The company returned $3.7 billion to shareholders through buybacks and dividends. The board authorized a new $20 billion share-repurchase program and raised the quarterly dividend to $0.92 per share. Qualcomm also completed a $2.3 billion acquisition of Alphawave to expand its data-center capabilities.
Guidance, Memory Headwinds, and Strategic Growth
Qualcomm forecast fiscal third-quarter revenue between $9.2 billion and $10.0 billion, with non-GAAP EPS of $2.10 to $2.30. This guidance fell short of analyst expectations and reflected supply constraints and an inventory drawdown by original equipment manufacturers (OEMs), particularly in China handset channels.
The company plans to support its data-center chip efforts through Alphawave integration while advancing its own CPUs and inference accelerators for server workloads. Initial shipments of custom silicon to a large hyperscaler are expected in the December 2026 quarter.
Automotive revenue surpassed a $5 billion annualized run rate, with management projecting it will exceed $6 billion by fiscal year-end. This growth is partly driven by commercial shipments of Qualcomm’s fifth-generation Snapdragon Digital Chassis.
Management expects China QCT Android revenue to bottom in the third quarter and recover afterward, anticipating a smartphone-market rebound beyond that period. The focus on AI-related silicon and accelerating automotive sales helped restore investor confidence after the softer guidance, highlighting new data-center and automotive revenue streams as offsets to near-term handset weakness.
These strategic drivers frame Qualcomm’s medium-term outlook as it integrates Alphawave and prepares for planned customer shipments.
