Qualcomm Beat Estimates as Phone Revenue Fell 26% and Auto Revenue Nearly Doubled

Qualcomm beat earnings estimates in its September quarter, but revenue from smartphone chips fell 26% as the company leaned harder on cars and other non-phone businesses.

Qualcomm reported adjusted revenue of $10.44 billion for the quarter ended September 27, 2026, down 7% from a year earlier. That beat the $10.11 billion average estimate compiled by LSEG. Adjusted earnings were $2.17 a share, a cent above the $2.16 estimate, though down 28% from $3.00 a year earlier.

On the statutory basis, revenue was $10.32 billion, down 8%, and earnings were $1.17 a share. Statutory profit was $1.25 billion, against a loss a year earlier that reflected a large tax charge, so the adjusted figures are the cleaner comparison this quarter.

Qualcomm sells chips — its QCT segment — and licenses its patent portfolio — QTL. The chip business is where the quarter split in two: the phone line shrank by more than a quarter while the car and connected-device lines grew.

Handsets did the damage

Handset revenue fell 26% to $5.14 billion, below the $5.25 billion that analysts polled by Visible Alpha expected. Handsets removed about $1.82 billion of sales from a year earlier, a calculation from the segment figures.

The market shrank underneath Qualcomm. Global smartphone shipments fell 20% in the September quarter to a 14-year low, according to Counterpoint Research. Demand for AI-server memory has pushed memory prices up, raising the cost of phones and squeezing the companies that design their processors.

In an interview with Reuters, chief executive Cristiano Amon said Android handset sales are ticking upward again. “Unlike some other companies, we called this memory thing early, and we said we prepared for it,” Amon said.

Cars nearly doubled

Automotive revenue rose 89% to $1.99 billion, which Qualcomm called its first $2 billion quarter. Revenue from internet-of-things products — connected devices outside phones and cars — rose 4% to $1.89 billion.

Together, automotive and IoT revenue grew 36% from a year earlier. That growth softened the handset decline but did not replace it: total chip-segment revenue still fell 8% to $9.02 billion, and the segment's pre-tax margin narrowed to 24% from 29%.

Licensing held up, with Apple on its way out

Licensing revenue fell 7% to $1.3 billion, with pre-tax profit of $918 million, a 70% margin. Qualcomm renewed long-term license agreements with Apple, Huawei and Transsion during the year, which gives the royalty business continuity even as its chip sales to Apple wind down.

That wind-down is now in the numbers. Amon told Reuters the December-quarter forecast includes no further sales from Apple, whose phones are shifting to Apple's own modem chips.

Guidance splits revenue from profit

For the December quarter, Qualcomm guided revenue to between $10.4 billion and $11.2 billion. The $10.8 billion midpoint — a calculation from the range — sits above the $10.48 billion LSEG average estimate.

The profit guide is softer. Qualcomm expects adjusted earnings of $2.15 to $2.35 a share, a $2.25 midpoint that sits just below the $2.27 LSEG estimate. Chip-segment revenue is guided to $9.0 billion to $9.6 billion, above the $8.88 billion estimate.

Costs explain the split. Qualcomm said the chip industry faces broad increases in wafer, assembly, test, packaging and memory costs, and that it is raising product prices in response. It expects the full benefit of those increases in chip gross margins only in the second half of fiscal 2027.

Investors took the cautious side of the guide. The shares had risen 5.33% in Wednesday's regular session to close at $173.19, before the results were released. In after-hours trading they traded at $164.51 at 21:06 UTC, down 5.01% from the close, according to CNBC quote data reported by MarketSpeaker.

The bill for the pivot

Capital spending for the full fiscal year reached $2.49 billion, more than double the $1.19 billion spent a year earlier, as Qualcomm builds beyond phones. Operating cash flow fell to $11.15 billion from $14.01 billion, and inventories rose to $8.64 billion from $6.53 billion.

Shareholders still came first in the cash queue. Qualcomm returned $11.67 billion over the year through buybacks and dividends, including $2 billion in the fourth quarter alone.

The non-phone bet, stated plainly

“Fiscal 2027 marks the start of our non-handset revenue inflection, including the ramp of our Data Center business,” Amon said in the results release. Qualcomm projects non-handset revenue growth of more than 60% in fiscal 2027 and reiterated its $5 billion data-center revenue target for that year.

The release also highlighted a multigenerational product collaboration with Amazon for AI data centers. Earlier on Wednesday, SpaceX picked Qualcomm to supply the radio equipment, baseband units and software for its planned Starlink Mobile 5G network, a deal TickerGrove covered separately.

On the earnings call, finance chief Akash Palkhiwala said Qualcomm expects no revenue contribution from the SpaceX work in fiscal 2027. He said it should become a material contributor in fiscal 2028, once the service launches.

What remains unknown

Qualcomm did not break out data-center revenue for the quarter in its release, so the current run rate behind the $5 billion fiscal 2027 target cannot be verified from the primary document. Whether handset revenue has bottomed depends on memory prices and Android demand, neither of which the company quantified beyond Amon's sequential-growth comment.

Also unknown is how large the Apple revenue cliff is inside the December-quarter guide, and whether the price increases land fast enough to protect chip margins before the second half of fiscal 2027.

What to watch next

Watch the December-quarter print first: handset revenue against this quarter's $5.14 billion, and chip margins against the promised second-half recovery. Then watch for any data-center revenue disclosure that lets investors test the $5 billion target, and for automotive revenue holding near $2 billion a quarter.