Rising Memory Costs Are Hurting Smartphones, Qualcomm Warns

Qualcomm Inc. (NASDAQ: QCOM ) stock fell about 6% in premarket trading Thursday after the chipmaker reported fiscal third-quarter revenue that topped Wall Street estimates but issued fourth-quarter adjusted earnings guidance below expectations.

Earnings Beat, But Guidance Disappoints Qualcomm reported revenue of $9.9 billion, topping the analyst consensus estimate of $9.67 billion, according to Pro.

Adjusted earnings per share were $2.21 in the quarter, missing a Street estimate of $2.23.

The company’s Qualcomm CDMA Technologies (QCT) segment generated $8.5 billion in revenue, driven by record automotive sales and continued growth in the Internet of Things business.

Qualcomm Technology Licensing (QTL) revenue totaled $1.3 billion.

QCT automotive revenue climbed 61% from a year earlier to a record $1.59 billion, marking the segment’s 23rd consecutive quarter of double-digit revenue growth.

CEO Cristiano Amon said two near-term custom silicon design wins are expected to begin generating revenue in the December quarter.

He added that wafer production is underway and tape-out has been completed for HBC Gen 1.

Qualcomm said elevated memory prices continue to weigh on the global smartphone market, pressuring handset demand and its QCT handset business.

Chief Financial Officer Akash Palkhiwala said QCT handset revenue of $5.1 billion reflected the impact of industrywide memory dynamics.

Fourth-Quarter Outlook Misses Estimates For the fiscal fourth quarter, Qualcomm expects revenue of $9.7 billion to $10.5 billion, compared with the analyst consensus estimate of $10.02 billion.

The company forecast adjusted earnings of $2.05 to $2.25 per share, below analysts’ expectations of $2.36 per share.

Qualcomm said unprecedented increases in memory prices and supply constraints created significant cyclical headwinds for the global smartphone market during fiscal 2026.

The company expects fourth-quarter QTL revenue of $1.2 billion to $1.4 billion and QCT revenue of $8.4 billion to $9 billion.

Android Weakness Weighs On Outlook Qualcomm said revenue from QCT handset sales to Chinese original equipment manufacturers reached a bottom in the third quarter and is expected to return to double-digit sequential growth in the fourth quarter.

The company expects fourth-quarter QCT handset revenue of about $5.2 billion, while QCT IoT revenue is expected to remain roughly flat from a year earlier.

Qualcomm said QCT Android handset revenue is expected to decline about 20% in fiscal 2026, reducing annual earnings by more than $1.50 per share.

The company expects QCT automotive revenue to grow about 60% year over year in the fourth quarter.

It also raised its outlook for annualized automotive revenue to about $7 billion exiting fiscal 2026 and said Snapdragon processors now power about 70% of Samsung Electronics Co., Ltd.’s (OTC: SSNLF ) flagship devices.

Non-Handset Growth Takes Center Stage Qualcomm raised its long-term target for QCT non-handset revenue to $40 billion by fiscal 2029, nearly doubling its previous goal.

The company expects data center revenue to reach $5 billion in fiscal 2027 and $15 billion in fiscal 2029.

Qualcomm expects fiscal 2027 non-handset revenue growth to replace its total fiscal 2026 Apple Inc. (NASDAQ: AAPL ) product revenue.

The company also said Apple-related revenue is expected to step down more quickly beginning in the fourth quarter as its modem share in the upcoming iPhone launch is projected to be materially lower than its previous estimate of 20%.

The company expects non-handset revenue growth to accelerate from 24% in fiscal 2026 to more than 60% in fiscal 2027, led by expansion in data center products.

Qualcomm also expects non-handset businesses to account for more than half of QCT revenue by fiscal 2027 and about two-thirds by fiscal 2029.

QCOM Price Action: Qualcomm shares were down 5.90% at $146.50 during premarket trading on Thursday, according to Pro data.

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