Qualcomm stock slips as handset weakness clouds strong auto growth

Qualcomm reported fiscal fourth-quarter results after the market close on Wednesday, November 4, with adjusted revenue and earnings above analyst expectations but a cautious near-term outlook. The company said first-quarter fiscal 2027 adjusted earnings should range from 2.15 to 2.35 US dollars per share on revenue of 10.4 billion to 11.2 billion US dollars, versus analyst expectations of 2.27 US dollars and 10.48 billion US dollars, according to CNBC.

Qualcomm stock traded at 137.13 euros on Lang & Schwarz at 14:43 CET on Thursday, November 5, 6.14 percent below the Xetra close of Wednesday, November 4. The comparison uses the 146.10-euro close for Qualcomm's Xetra listing QCI.DE, as reported by Yahoo Finance.

Handsets Weigh On Results

Fourth-quarter adjusted revenue reached 10.44 billion US dollars, while adjusted earnings were 2.17 US dollars per share. Qualcomm's handset chip revenue fell 26 percent year over year to 5.14 billion US dollars, below the 5.21 billion US dollar StreetAccount estimate cited by CNBC. Management said higher memory costs are weighing on smartphone demand and expects the handset market to remain flat in 2027.

Chief Executive Cristiano Amon said the company was seeing signs of sequential improvement in handsets and that Android shipments in China had bottomed. He also said Qualcomm had raised prices in September as memory costs increased, but the market remains exposed to weaker consumer demand and the ongoing ramp-down of Apple product revenue.

Automotive And Data Center Expand

Automotive revenue was the quarter's strongest growth driver, rising 89 percent year over year to 1.99 billion US dollars. IoT revenue increased 4 percent to 1.88 billion US dollars. Combined automotive and IoT revenue grew 36 percent year over year, supporting management's effort to reduce its dependence on smartphones.

Qualcomm also generated 650 million US dollars in data center revenue during the quarter, primarily from customization and connectivity work. Amon said the company expects 5 billion US dollars of data center revenue in fiscal 2027 and has engaged a global hyperscaler. The company also signed a customer for optical connectivity, according to CNBC.

The licensing business, QTL, reported revenue of 1.3 billion US dollars, down 7 percent year over year. Amon said QTL would maintain its scale. Qualcomm has renewed licensing agreements with Apple, Huawei and Transsion, preserving an important source of high-margin revenue while the chip business adjusts to the smartphone slowdown.

Outlook Sets Near-Term Test

For the December quarter, Qualcomm expects QCT revenue of 9.0 billion to 9.6 billion US dollars and QTL revenue of 1.3 billion to 1.5 billion US dollars. The QCT forecast includes data center activity, while handset revenue is expected to decline by a mid-single-digit percentage sequentially.

The report leaves investors balancing two opposing trends: a material handset contraction and rapid automotive expansion, with data center shipments still at an early stage. The current valuation debate will depend on whether non-handset growth can offset smartphone weakness without a prolonged margin impact.

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