Qualcomm shares plunged 7% in extended trading on Wednesday in New York. The trigger was immediate. Fourth-quarter handset chip sales tumbled 26% to $5.14 billion, falling short of Wall Street forecasts of $5.25 billion as soaring memory costs battered global smartphone assembly lines.
Total chip segment sales dropped 8% to $9.02 billion. While total adjusted revenue came in at $10.44 billion—edging past consensus estimates of $10.11 billion—and adjusted profit touched $2.17 per share, traders dumped the stock within minutes of the opening bell. A soft bottom-line forecast soured AirNews. For the first quarter, Qualcomm guided adjusted earnings between $2.15 and $2.35 per share. The $2.25 midpoint fell short of the $2.27 expected by analysts.
The macro backdrop remains harsh. Global smartphone shipments plummeted 20% in the September quarter to a 14-year low, driven by skyrocketing memory component prices that forced device manufacturers to throttle back production.
CEO Cristiano Amon pushed back against the gloom, insisting Android demand has hit a trough. "Unlike some other companies, we called this memory thing early, and we prepared for it," Amon stated, pointing to early sequential recovery in Android orders. "We have been really executing on the non-handset business."
Yet Wall Street zeroed in on profit margins. Bernstein analyst Stacy Rasgon noted that the selloff gathered momentum because Qualcomm's "margin outlook is lousy" and its assumption of a flat smartphone market heading into 2027 looked aggressive against broader sector headwinds. Chief Financial Officer Akash Palkhiwala told institutional analysts that baseline gross margin will recover to its historical band of 48% to 50% by the second quarter as price hikes take effect.
| Qualcomm Q4 Financial Snapshot | Reported Metric | Consensus Estimate | YoY Change |
|---|---|---|---|
| Handset Chip Revenue | $5.14 Billion | $5.25 Billion | -26% |
| Total Chip Segment Sales | $9.02 Billion | $8.88 Billion | -8% |
| Total Adjusted Revenue | $10.44 Billion | $10.11 Billion | -7% |
| Adjusted EPS | $2.17 | $2.16 | Flat |
| Q1 FY27 EPS Guidance (Midpoint) | $2.25 | $2.27 |
A deeper structural transformation is underway. Qualcomm's forward model now fully writes off Apple. Amon confirmed that first-quarter guidance assumes zero revenue from the iPhone maker as Cupertino transitions to in-house modem silicon.
To plug that hole, Qualcomm is pivoting toward hyperscale infrastructure. Non-handset design wins surged 70% year-over-year, with the company targeting 60% growth across those diversification channels to entirely replace Apple's revenue baseline by fiscal 2027.
A commercial agreement signed in September allows Amazon to purchase up to $60 billion in Qualcomm artificial intelligence processors and data-centre hardware, backed by warrants for up to 25 million shares valued at $1.8 billion. Qualcomm also locked in a multi-year 5G equipment deal to power SpaceX's planned Starlink Mobile network starting in 2027. But enterprise bets take time to compound. As Moor Insights & Strategy analyst Anshel Sag observed, the multi-year SpaceX hardware shipments cannot immediately counterbalance a 26% collapse in Qualcomm's legacy cash cow. Qualcomm heads into the next fiscal quarter racing to demonstrate that hyperscaler data-centre revenue—projected to hit $650 million in the current period—can cushion the blow from an increasingly volatile mobile market.
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