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Can Qualcomm's QCT Segment Sustain Growth Amid Handset Weakness?
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Key Takeaways
QCOM's QCT revenues fell 4% year over year as handset weakness and inventory adjustments weighed.
QCOM automotive revenues jumped 38% to $1.3 billion, aided by digital cockpit and ADAS launches.
QCOM IoT revenues rose 9% to $1.73 billion, supported by demand for edge AI applications.
Qualcomm Incorporated (QCOM - Free Report) generated $9.08 billion in revenues in the Qualcomm CDMA Technologies (QCT) segment during the second quarter of 2026. Revenues declined 4% year over year. QCT EBT margin contracted to 27% from 30% a year earlier. The primary factor impacting QCT revenue growth was weakness in the handset market.
Memory supply constraints and rising memory prices led several manufacturers to scale back in smartphone buildout plans and increase focus on inventory drawdown. QCT shipments into China were lower than end-user demand. This reflects that the slowdown is a temporary inventory adjustment rather than a structural decline in demand. The company expects this weakness in the smartphone market to continue in the third quarter.
Amid this backdrop, the automotive and IoT business remains a major growth driver in this segment. In fiscal second quarter 2026, automotive revenues rose 38% year over year to $1.3 billion as new digital cockpit and ADAS launches transitioned to the company’s fourth-generation chipsets. Qualcomm also highlighted expanding ecosystem engagement, including work with partners to broaden production-ready ADAS options on Snapdragon Ride platforms, which can support a larger share of the vehicle compute bill of materials as programs move from design win to volume shipments.
IoT revenues increased 9% year over year to $1.73 billion, driven by growth across both consumer and industrial markets. It continues to benefit from the growing demand for edge AI applications. Automotive and IoT are reducing exposure to the volatile smartphone market.
How Are Competitors Faring?
Qualcomm faces competition from NVIDIA Corporation (NVDA - Free Report) and Advanced Micro Devices (AMD - Free Report) . NVIDIA continues to build a longer-duration growth option in automotive, robotics and other physical AI applications. The company expanded partnerships with Hyundai Motor Company and Kia for next-generation autonomous driving built on its DRIVE platform and broadened its relationship with Uber to launch a fleet of autonomous vehicles powered by DRIVE AV software. Data Center and Edge Computing remain a strong growth driver for NVIDIA.
Intel remains a major player in the automotive and edge AI space. Intel recently announced the launch of Ethernet E835 Controllers and Network Adapters for cloud, enterprise, AI and telecom infrastructure. The products support bandwidth scaling up to 200GbE and are designed to improve networking performance, scalability and power efficiency in data center, AI and edge computing environments. The acquisition of Mobileye has helped the company to rapidly penetrate the autonomous car technology market, dominated by the likes of NVIDIA and Qualcomm.
QCOM’s Price Performance, Valuation and Estimates
Qualcomm shares have gained 47.6% over the past year compared with the industry’s growth of 114.6%.
Image Source: Zacks Investment Research
Going by the price/earnings ratio, the company's shares currently trade at 20.88 forward earnings, lower than 37.82 for the industry.
Image Source: Zacks Investment Research
Earnings estimates for fiscal 2026 and 2027 have declined over the past 60 days.
View the Zacks #1 Rank List
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Can Qualcomm's QCT Segment Sustain Growth Amid Handset Weakness?
Key Takeaways
Qualcomm Incorporated (QCOM - Free Report) generated $9.08 billion in revenues in the Qualcomm CDMA Technologies (QCT) segment during the second quarter of 2026. Revenues declined 4% year over year. QCT EBT margin contracted to 27% from 30% a year earlier.
The primary factor impacting QCT revenue growth was weakness in the handset market.
Memory supply constraints and rising memory prices led several manufacturers to scale back in smartphone buildout plans and increase focus on inventory drawdown. QCT shipments into China were lower than end-user demand. This reflects that the slowdown is a temporary inventory adjustment rather than a structural decline in demand. The company expects this weakness in the smartphone market to continue in the third quarter.
Amid this backdrop, the automotive and IoT business remains a major growth driver in this segment. In fiscal second quarter 2026, automotive revenues rose 38% year over year to $1.3 billion as new digital cockpit and ADAS launches transitioned to the company’s fourth-generation chipsets. Qualcomm also highlighted expanding ecosystem engagement, including work with partners to broaden production-ready ADAS options on Snapdragon Ride platforms, which can support a larger share of the vehicle compute bill of materials as programs move from design win to volume shipments.
IoT revenues increased 9% year over year to $1.73 billion, driven by growth across both consumer and industrial markets. It continues to benefit from the growing demand for edge AI applications. Automotive and IoT are reducing exposure to the volatile smartphone market.
How Are Competitors Faring?
Qualcomm faces competition from NVIDIA Corporation (NVDA - Free Report) and Advanced Micro Devices (AMD - Free Report) . NVIDIA continues to build a longer-duration growth option in automotive, robotics and other physical AI applications. The company expanded partnerships with Hyundai Motor Company and Kia for next-generation autonomous driving built on its DRIVE platform and broadened its relationship with Uber to launch a fleet of autonomous vehicles powered by DRIVE AV software. Data Center and Edge Computing remain a strong growth driver for NVIDIA.
Intel remains a major player in the automotive and edge AI space. Intel recently announced the launch of Ethernet E835 Controllers and Network Adapters for cloud, enterprise, AI and telecom infrastructure. The products support bandwidth scaling up to 200GbE and are designed to improve networking performance, scalability and power efficiency in data center, AI and edge computing environments. The acquisition of Mobileye has helped the company to rapidly penetrate the autonomous car technology market, dominated by the likes of NVIDIA and Qualcomm.
QCOM’s Price Performance, Valuation and Estimates
Qualcomm shares have gained 47.6% over the past year compared with the industry’s growth of 114.6%.
Image Source: Zacks Investment Research
Going by the price/earnings ratio, the company's shares currently trade at 20.88 forward earnings, lower than 37.82 for the industry.
Image Source: Zacks Investment Research
Earnings estimates for fiscal 2026 and 2027 have declined over the past 60 days.
Image Source: Zacks Investment Research
Qualcomm currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.