Qualcomm Handset Sales Fall 26% as Shares Drop on Data-Center Pivot

Qualcomm’s handset chip business shrank by more than a quarter last quarter, and shares slid about 7% in Wednesday extended trading as investors sorted through a miss in phones against a louder pitch on cars and AI data centers.

In results for the fiscal fourth quarter ended Sept. 27, Qualcomm reported non-GAAP revenue of $10.44 billion, down 7% from a year earlier, and non-GAAP earnings of $2.17 a share, down 28%. GAAP revenue was $10.32 billion. Handset revenue inside the QCT semiconductor unit fell 26% to $5.14 billion. That unit’s overall sales dropped 8% to $9.02 billion, with pretax margin narrowing to 24% from 29%.

CNBC, citing StreetAccount, said handset sales trailed a $5.21 billion estimate. Adjusted earnings of $2.17 a share still edged past the $2.16 LSEG consensus, per that report, but the company’s first-quarter outlook put non-GAAP earnings at $2.15 to $2.35 a share on revenue of $10.4 billion to $11.2 billion. Analysts had expected $2.27 a share on revenue of $10.48 billion, CNBC said. Shares slid about 7% in Wednesday extended trading, CNBC reported, and SiliconANGLE likewise tracked a mid-single-digit after-hours drop as investors focused on the handset miss and soft profit outlook.

“Fiscal 2027 marks the start of our non-handset revenue inflection, including the ramp of our Data Center business,” Cristiano Amon, Qualcomm’s president and CEO, said in the earnings release. “Non-handset revenues are projected to grow by more than 60% year-over-year, and we are reiterating our fiscal 2027 Data Center revenue target of $5B.”

Automotive chips were the clearest counterweight. QCT automotive revenue jumped 89% to $1.99 billion, the segment’s first $2 billion quarter. Internet-of-things revenue rose 4% to $1.89 billion. Combined, automotive and IoT grew 36%. Licensing (QTL) revenue fell 7% to $1.30 billion even after Qualcomm said it renewed long-term agreements with Apple, Huawei and Transsion.

Data center is the harder sell for near-term earnings. Amon told CNBC the company booked about $650 million of data-center revenue in the quarter, mostly from custom and connectivity work, and had engaged a global hyperscaler after signing a customer for optical connectivity. “We don’t have a demand issue; it’s a supply issue,” he said, according to CNBC. “If I had more supply, I would probably be doing better.” The company’s earnings presentation lists Amazon among connectivity and custom-silicon customers and points to a multi-generation product collaboration for AI data-center infrastructure. That buildout sits beside a separate, already covered Starlink Mobile radio deal that expands Qualcomm’s ground-network chip work outside phones.

Memory and other input costs are cutting both ways. Higher memory prices, fueled in part by AI server demand, have pushed handset makers to raise device prices and cool phone demand, CNBC noted, while Qualcomm says it is raising its own product prices. The company expects the full benefit of those pricing actions in QCT gross margins only in the second half of fiscal 2027.

For the full fiscal year, GAAP revenue was $43.1 billion, down 3%. Non-GAAP earnings were $10.54 a share, down 12%. Qualcomm returned about $2.0 billion to stockholders in the fourth quarter, including $1.0 billion of share repurchases and $1.0 billion in dividends.