Qualcomm Schedules Fiscal 2026 Fourth Quarter Results Announcement
Qualcomm (QCOM) is set to unveil its fourth-quarter and full-year fiscal 2026 financial performance following the closure of U.S. stock markets on November 4, Eastern Time. A conference call is scheduled for 4:45 p.m. on that same day.
Analysts predict the semiconductor giant’s revenue for the fourth quarter will range from $10.1 billion to $10.15 billion, with adjusted earnings per share anticipated to fall between $2.16 and $2.17.
This is in alignment with Qualcomm’s earlier guidance for revenue between $9.7 billion and $10.5 billion, alongside an adjusted EPS estimate of $2.05 to $2.25, suggesting that market expectations are situated close to the median of this forecast.
In comparison to last year’s performance, this quarter’s revenue is projected to diminish by roughly 10%, while adjusted EPS may witness a steep decrease of nearly 28%.
Despite growth in the automotive, IoT, and data center sectors, diminished demand for smartphone chips, reduced orders from Apple, and escalated production costs present significant obstacles to overall performance.
Declining Smartphone Demand and Withdrawal of Apple Orders Heighten Revenue Challenges
In its preceding quarter, Qualcomm reported revenue of $9.95 billion and adjusted earnings per share of $2.21.
Notably, the company’s chip business revenue stood at approximately $8.5 billion, with handset chips contributing $5.1 billion, representing around 60% of the chip segment’s overall revenue.
Even if the automotive sector sustains an impressive growth rate nearing 60%, a stark decline in handset revenue will render it challenging for this emerging business to compensate for the shortfall effectively.
At present, the automotive sector constitutes less than one-third the magnitude of the handset division, thereby constraining the high-growth segment’s potential impact on total revenue.
Furthermore, the surge in memory chip costs has injected additional volatility into the equation. Restricted DRAM and NAND supplies have propelled the production expenses of smartphones, prompting manufacturers to reconsider their shipment strategies.
Qualcomm is endeavoring to offset rising wafer, packaging, testing, and memory costs through product price hikes; however, such adjustments typically unfold gradually in tandem with contract renewals and the launch of new products, resulting in a delayed realization of their full effect over several quarters.
Qualcomm anticipates a more pronounced decline stemming from its dealings with Apple. Projected revenues from Apple-related products for the fourth quarter of fiscal 2026 are expected to plummet by approximately 50% from the previous quarter, alongside revisions downward for its forecasted share of next-generation iPhone modems, previously estimated at around 20%.
As Apple accelerates its internal modem development, Qualcomm may confront further diminishment in revenue from this essential client.
Bernstein has assessed Qualcomm’s Apple-related chip revenue for fiscal 2026 to be approximately between $7.5 billion and $8 billion, forecasting a staggering decrease of around $6 billion by fiscal 2027.
In response, the firm has adjusted its fiscal 2027 revenue prediction for Qualcomm from $44.9 billion down to $42.2 billion, coupled with a projected decrease in adjusted EPS from $9.57 to $8.77, both figures falling short of previous market consensus.
Automotive Sector Exhibits Robust Growth; Data Center Ventures Enter Monetization Stage
Amid the tumult in its smartphone segment, Qualcomm is intensifying its initiatives in automotive, IoT, and data center markets.
In the third quarter of fiscal 2026, the automotive revenue peaked at approximately $1.6 billion, marking a year-over-year increase of 61%, while IoT revenue reached around $1.8 billion, reflecting a 9% increase year-on-year.
Collectively, these sectors contributed close to $3.4 billion, representing 40% of the total revenue derived from Qualcomm’s chip business.
When annualized based on this quarter’s performance, Qualcomm’s non-smartphone chip revenue approximates $13.6 billion.
The company has previously elevated its fiscal 2029 revenue objective for non-smartphone chips to $40 billion, nearly triple its current scale.
Achieving this ambitious target within a three-year timeframe entails a compound annual growth rate of roughly 43%, necessitating simultaneous acceleration across automotive, IoT, and data center sectors.
Within these domains, the automotive sector possesses a relatively stable revenue foundation. Qualcomm forecasts that by the end of fiscal 2026, annualized automotive revenue may approximate $7 billion, exceeding its prior target of $6 billion.
However, the journey from design success to mass production in automotive chips is typically prolonged; thus, immediate revenue gains are not guaranteed, necessitating ongoing scrutiny of the conversion pace.
Conversely, data centers present a more expansive yet higher-risk growth trajectory, wherein Qualcomm is advancing tailored silicon solutions, AI inference accelerators, and server CPUs.
Recently, Qualcomm has entered a multi-year product collaboration with Amazon aimed at developing AI infrastructure and high-speed interconnect solutions for AWS data centers.
Management anticipates revenue from the inaugural series of custom chips could begin manifesting in the December quarter.
Disclosure during the forthcoming earnings call regarding customer deployments, order values, and timelines for revenue recognition may yield a clearer foundation for gauging fiscal 2027 growth.
Profit Margins Under Duress; Wall Street’s Uppermost Price Target Stands at $270
Qualcomm’s chip business is bracing for a contraction in pre-tax profit margins, projected to decline from 26% in the prior quarter to a range of 23% to 25%.
In addition to diminished handset revenues, the initial costs associated with data center projects may exert additional pressure on overall margins.
Forecasts indicate that data center investments could potentially reduce the chip business’s gross margin by approximately 1.5 to 2 percentage points.
Conversely, the patent licensing sector continues to yield stable profits. For the preceding quarter, revenue from Qualcomm’s licensing division was estimated at about $1.3 billion, accompanied by a pre-tax profit margin soaring to 69%.
Fourth-quarter revenue guidance for this segment is anticipated to be between $1.2 billion and $1.4 billion, with margins expected to remain steady at 68% to 72%.
Although the revenue scale of this division is comparatively smaller, it provides a buffer for overall group earnings amidst declining chip margins.
According to TipRanks, eleven Wall Street analysts have evaluated Qualcomm over the last three months, yielding an average 12-month price target of $196.82, featuring a highest projection of $270 and a lowest estimate of $155.
The consensus rating comprises 3 Buys, 6 Holds, and 2 Sells, resulting in an overall recommendation of “Hold.”
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