Qualcomm forecasts weaker near-term revenue as smartphone chip sales fall 26%

Qualcomm Inc. reported adjusted quarterly revenue above Wall Street estimates on Wednesday, but issued a forecast below analyst expectations as smartphone chip sales fell and rising memory costs weighed on handset demand. Shares fell 7% in extended trading.

The company reported adjusted earnings per share of $2.17 against a $2.16 LSEG estimate, on adjusted revenue of $10.44 billion. For the current quarter, Qualcomm guided to adjusted earnings per share of $2.15 to $2.35 on adjusted revenue of $10.4 billion to $11.2 billion; analysts had expected $2.27 on $10.48 billion.

Handset chip sales declined 26%

Adjusted company revenue fell 7% from a year earlier. Handset chip sales declined 26% to $5.14 billion, below a StreetAccount estimate of $5.21 billion, even though Qualcomm raised prices in September.

The decline came as higher memory costs pushed handset makers to raise prices and hurt demand. Qualcomm said it was beginning to see sequential growth in handset chips and that Android shipments in China had bottomed, though the company continued to expect the overall handset market to be flat in 2027.

Data center business expands

Qualcomm generated $650 million in data center revenue during the quarter, primarily from customization and connectivity work, CEO Cristiano Amon said. The company expects $5 billion in data center revenue in fiscal 2027 and has forecast approximately $650 million for the first quarter of 2027.

Amon said Qualcomm had recently signed a customer for optical connectivity and engaged a global hyperscaler. He described the data center business as facing supply constraints rather than a lack of demand. The company also expects data centers eventually to represent about 30% of its business.

Partnerships with Amazon and Meta, announced earlier in 2026, form part of Qualcomm's push into AI data center infrastructure. The Verge reported that Qualcomm projects data center revenue could reach $15 billion by 2029, compared with total company revenue of $10.4 billion in 2026.

Stock reaction followed the forecast

Qualcomm shares dropped 7% in extended trading after the company issued a near-term earnings outlook that was lighter than Wall Street expectations, despite the adjusted quarterly results topping estimates.

The next disclosed milestones are Qualcomm's first-quarter 2027 revenue forecast of approximately $650 million for data centers, its fiscal 2027 target of $5 billion in data center revenue and evidence of whether handset chip sales return to sequential growth.