We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Qualcomm Stock Worth Buying After Mixed Q4 Results?
Read MoreHide Full Article
Key Takeaways
Qualcomm's Q4 earnings fell 28%, while revenues declined 7% amid weak handset demand and rising costs.
QCOM's automotive revenues surged 89% to $1.99 billion, while handset revenues plunged 26% to $5.14 billion.
Qualcomm faces margin pressure from rising chip costs, while fiscal 2027 earnings estimates fell 2.7%.
QUALCOMM Incorporated (QCOM - Free Report) reported fourth-quarter fiscal 2026 non-GAAP earnings of $2.17 per share, down 28% year over year from $3. Non-GAAP revenues declined 7% to $10.44 billion from $11.27 billion in the year-ago quarter, but came in near the upper end of management's guidance range.
Handset Weakness Weighs on QCT Performance
Qualcomm CDMA Technologies (QCT) revenues declined 8% year over year to $9.02 billion. Handset revenues plunged 26% to $5.14 billion from $6.96 billion, indicating sluggish smartphone demand, elevated memory prices and the ongoing reduction in Apple modem shipments.
Management indicated that the June quarter marked the bottom for its China Android business, with revenues recovering sequentially in the September quarter. However, Qualcomm expects global handset shipments to remain flat to slightly lower in calendar 2027, reflecting continued uncertainty in smartphone demand.
Qualcomm's Automotive Business Gains Momentum
Automotive revenues jumped 89% to $1.99 billion from $1.05 billion in the prior-year quarter, driven by increasing adoption of integrated compute modules and fifth-generation Snapdragon Digital Chassis platforms. Higher semiconductor content per vehicle and the conversion of design wins into commercial shipments supported the strong performance. Qualcomm exited fiscal 2026 with an automotive annualized revenue run rate of approximately $8 billion, exceeding its previous $7 billion expectation. Meanwhile, IoT revenues increased 4% year over year to $1.89 billion, supported by 20% growth in industrial, networking and robotics products, partly offset by memory-related constraints in consumer devices.
Combined automotive and IoT revenues climbed 36% to approximately $3.88 billion, highlighting progress in Qualcomm's efforts to diversify beyond smartphones.
Higher Costs Pressure Qualcomm's Margins
QCT earnings before taxes (EBT) declined 26% year over year to $2.14 billion, while EBT margin contracted 500 basis points to 24%. Lower handset revenues and rising semiconductor manufacturing costs weighed on profitability despite strong automotive sales.
Qualcomm Technology Licensing (QTL) revenues fell 7% to $1.3 billion, while EBT decreased 10% to $918 million. The segment's EBT margin narrowed to 70% from 72% a year earlier.
Companywide GAAP research and development expenses increased 13% to $2.68 billion, reflecting continued investments in advanced semiconductor technologies and growth initiatives. Selling, general and administrative expenses rose 6% to $963 million. Qualcomm is implementing product price increases to offset higher input costs across wafer fabrication, assembly, testing, advanced packaging and memory. Management expects the full benefit of these pricing actions to materialize in the second half of fiscal 2027.
Qualcomm remains exposed to customer insourcing and competition in premium mobile and adjacent compute markets. The company is venturing into the data center market. But it faces strong competition from established players, such as Intel Corporation (INTC - Free Report) and Advanced Micro Devices (AMD - Free Report) .
Image Source: Zacks Investment Research
Price Performance
Qualcomm shares have declined 8.3% over the past year against the industry’s growth of 5.6%, lagging peers Intel and AMD. While Intel has gained 37%, AMD surged 73.2% over this period.
Image Source: Zacks Investment Research
Estimate Revision Trend for QCOM
Earnings estimates for Qualcomm for fiscal 2026 have moved down 0.5% to $10.02 over the past 60 days, while the same for fiscal 2027 has declined 2.7% to $12.36. The negative estimate revision depicts bearish sentiment for the stock.
Despite strong automotive momentum and promising opportunities in AI data centers, the company's near-term performance remains pressured by declining handset revenues, reduced Apple modem shipments and elevated semiconductor input costs. Moreover, increasing investments in AI infrastructure and the expansion of relatively lower-gross-margin custom silicon operations could constrain profitability in fiscal 2027. Although Qualcomm's diversification initiatives offer long-term growth potential, persistent smartphone market weakness and margin headwinds warrant a cautious stance on the stock.
View the Zacks #1 Rank List
Image: Bigstock
Is Qualcomm Stock Worth Buying After Mixed Q4 Results?
Key Takeaways
QUALCOMM Incorporated (QCOM - Free Report) reported fourth-quarter fiscal 2026 non-GAAP earnings of $2.17 per share, down 28% year over year from $3. Non-GAAP revenues declined 7% to $10.44 billion from $11.27 billion in the year-ago quarter, but came in near the upper end of management's guidance range.
Handset Weakness Weighs on QCT Performance
Qualcomm CDMA Technologies (QCT) revenues declined 8% year over year to $9.02 billion. Handset revenues plunged 26% to $5.14 billion from $6.96 billion, indicating sluggish smartphone demand, elevated memory prices and the ongoing reduction in Apple modem shipments.
Management indicated that the June quarter marked the bottom for its China Android business, with revenues recovering sequentially in the September quarter. However, Qualcomm expects global handset shipments to remain flat to slightly lower in calendar 2027, reflecting continued uncertainty in smartphone demand.
Qualcomm's Automotive Business Gains Momentum
Automotive revenues jumped 89% to $1.99 billion from $1.05 billion in the prior-year quarter, driven by increasing adoption of integrated compute modules and fifth-generation Snapdragon Digital Chassis platforms. Higher semiconductor content per vehicle and the conversion of design wins into commercial shipments supported the strong performance.
Qualcomm exited fiscal 2026 with an automotive annualized revenue run rate of approximately $8 billion, exceeding its previous $7 billion expectation. Meanwhile, IoT revenues increased 4% year over year to $1.89 billion, supported by 20% growth in industrial, networking and robotics products, partly offset by memory-related constraints in consumer devices.
Combined automotive and IoT revenues climbed 36% to approximately $3.88 billion, highlighting progress in Qualcomm's efforts to diversify beyond smartphones.
Higher Costs Pressure Qualcomm's Margins
QCT earnings before taxes (EBT) declined 26% year over year to $2.14 billion, while EBT margin contracted 500 basis points to 24%. Lower handset revenues and rising semiconductor manufacturing costs weighed on profitability despite strong automotive sales.
Qualcomm Technology Licensing (QTL) revenues fell 7% to $1.3 billion, while EBT decreased 10% to $918 million. The segment's EBT margin narrowed to 70% from 72% a year earlier.
Companywide GAAP research and development expenses increased 13% to $2.68 billion, reflecting continued investments in advanced semiconductor technologies and growth initiatives. Selling, general and administrative expenses rose 6% to $963 million.
Qualcomm is implementing product price increases to offset higher input costs across wafer fabrication, assembly, testing, advanced packaging and memory. Management expects the full benefit of these pricing actions to materialize in the second half of fiscal 2027.
Qualcomm remains exposed to customer insourcing and competition in premium mobile and adjacent compute markets. The company is venturing into the data center market. But it faces strong competition from established players, such as Intel Corporation (INTC - Free Report) and Advanced Micro Devices (AMD - Free Report) .
Image Source: Zacks Investment Research
Price Performance
Qualcomm shares have declined 8.3% over the past year against the industry’s growth of 5.6%, lagging peers Intel and AMD. While Intel has gained 37%, AMD surged 73.2% over this period.
Image Source: Zacks Investment Research
Estimate Revision Trend for QCOM
Earnings estimates for Qualcomm for fiscal 2026 have moved down 0.5% to $10.02 over the past 60 days, while the same for fiscal 2027 has declined 2.7% to $12.36. The negative estimate revision depicts bearish sentiment for the stock.
Image Source: Zacks Investment Research
End Note
Qualcomm carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Despite strong automotive momentum and promising opportunities in AI data centers, the company's near-term performance remains pressured by declining handset revenues, reduced Apple modem shipments and elevated semiconductor input costs. Moreover, increasing investments in AI infrastructure and the expansion of relatively lower-gross-margin custom silicon operations could constrain profitability in fiscal 2027. Although Qualcomm's diversification initiatives offer long-term growth potential, persistent smartphone market weakness and margin headwinds warrant a cautious stance on the stock.