Qualcomm reported quarterly results on Wednesday that beat Wall Street estimates, but the chipmaker’s profit forecast was softer than expected. The stock slipped 7% in extended trading.
Here’s how the chipmaker performed compared to LSEG consensus estimates:
- EPS: $2.17 adjusted, versus $2.16 expected
- Income: $10.44 billion, adjusted
For the current quarter, Qualcomm reported earnings per share of between $2.15 and $2.35 on revenue of between $10.4 billion and $11.2 billion. Analysts were expecting earnings per share of $2.27 on revenue of $10.48 billion.
Most of Qualcomm’s chip sales come from systems-on-chips and modems for smartphones. It’s a market currently in turmoil as rising memory costs force phone makers to raise prices, hurting demand. The company’s adjusted revenue fell 7% from the previous year.
Qualcomm raised prices in September. Still, phone chip sales in the quarter fell 26% to $5.14 billion, behind a StreetAccount estimate of $5.21 billion. Qualcomm said it was starting to see sequential growth in the category and that Android shipments in China had reached an all-time low, although the company predicts the phone market will be flat in 2027.
Under the leadership of Cristiano Amon, Qualcomm has tried to attract investors’ attention to other types of chips. The company is looking to enter the rapidly growing AI data center infrastructure market. Data center revenue was $650 million in the quarter, primarily from customization and connectivity work, Amon said.
Amon said Qualcomm expects $5 billion in data center revenue in fiscal 2027. He said the company recently signed a customer for optical connectivity and hired a global hyperscaler.
“We don’t have a demand problem, it’s a supply problem,” Amon said. “If I had more supply, I’d probably do better.”
Qualcomm also sells chips for cars and other automotive uses. Revenue from that division soared 89% on an annual basis to $1.99 billion, beating StreetAccount’s expectations of $1.66 billion.
Internet of Things revenue includes low-power chips, SoCs for smart glasses, chips for laptops, as well as the company’s offering to provide cellular infrastructure. Earlier on Wednesday, Qualcomm announced an agreement to provide technology to SpaceX cell construction. IoT revenue increased 4% from a year earlier to $1.88 billion, slightly above estimates.
Qualcomm’s QTL division includes revenue from licensing intellectual property for 5G and other technologies to other companies. Qualcomm said during the quarter that it had renewed its licensing agreements with Apple, Huawei and Transsion.
“QTL will maintain its scale in the future,” Amon said.
QTL’s revenue fell 7% to $1.3 billion, in line with a StreetAccount estimate.
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