Qualcomm reported earnings that beat Wall Street estimates but issued a weaker-than-expected guidance, causing its stock to fall 7% in extended trading on Wednesday.
The chipmaker posted earnings per share and revenue above consensus, yet forecast current-quarter earnings per share between $2.15 and $2.35 on revenue of $10.4 billion to $11.2 billion. Analysts expected $2.27 earnings per share on $10.48 billion in revenue.
Qualcomm's handset chip business faces headwinds from rising memory costs forcing smartphone makers to raise prices and reduce demand. Adjusted company revenue fell 7% year-over-year. Handset chip sales fell 26% to $5.14 billion, below a StreetAccount estimate of $5.21 billion. CEO Cristiano Amon said the company sees sequential growth in that category and that Android shipments in China have bottomed, though he predicts the handset market will be flat in 2027.
Amon emphasized Qualcomm is shifting focus to data center chips for AI infrastructure. The company reported $650 million in data center revenue during the quarter and expects $5 billion in data center revenue in fiscal 2027. Amon said Qualcomm recently signed a customer for optical connectivity and engaged a global hyperscaler.
"We don't have a demand issue; it's a supply issue," Amon said. "If I had more supply, I would probably be doing better."
Automotive revenue surged 89% year-over-year to $1.99 billion, beating StreetAccount expectations of $1.66 billion. Internet of Things revenue rose 4% to $1.88 billion, slightly above estimates. The division includes low-power chips, smart glasses SoCs, and laptop chips. Qualcomm announced a deal to provide technology to SpaceX's cellular buildout. QTL, Qualcomm's licensing division, saw revenue fall 7% to $1.3 billion, in line with estimates. Amon said Qualcomm renewed licensing agreements with Apple, Huawei, and Transsion during the quarter and that QTL will maintain its scale going forward.