Qualcomm Shares Fall After Handset Chip Sales Drop 26%

Qualcomm Incorporated said Wednesday that non-GAAP revenue for the quarter ended Sept. 27 was $10.44 billion and adjusted earnings were $2.17 a share, according to the company’s release. Handset chip sales fell 26% to $5.14 billion, and the stock dropped about 7% in extended trading, CNBC reported.

Wall Street had expected adjusted earnings of about $2.16 a share on roughly $10.48 billion in revenue, SiliconANGLE and CNBC reported. GAAP revenue was $10.32 billion, down 8% from a year earlier, the company said.

Handsets, cars and data centers

Handset chips remain Qualcomm’s largest product line. SiliconANGLE said rising memory costs have pushed phone makers to raise prices and cut demand. Qualcomm raised its own chip prices in September, CNBC reported, but the handset drop still missed a StreetAccount estimate of $5.21 billion.

Automotive revenue rose 89% to $1.99 billion, the company’s first quarter above $2 billion in that segment. Internet-of-things revenue rose 4% to $1.88 billion. Combined automotive and IoT growth was 36% year over year, Chief Executive Cristiano Amon said in the release.

Data-center revenue reached $650 million in the quarter, mostly from customization and connectivity work, Amon told analysts, according to CNBC. The company repeated a fiscal 2027 data-center revenue target of $5 billion and said it announced a multi-generational product collaboration with Amazon for data centers.

Licensing revenue in the QTL unit fell 7% to $1.3 billion even after Qualcomm renewed long-term agreements with Apple, Huawei and Transsion, the release said.

First-quarter outlook

For the current quarter, Qualcomm guided to non-GAAP diluted earnings of $2.15 to $2.35 a share on revenue of $10.4 billion to $11.2 billion. Analysts surveyed by LSEG expected $2.27 a share on $10.48 billion, CNBC reported. Midpoint EPS guidance therefore trails that consensus.

Arm Holdings, reporting separately, posted adjusted earnings of 52 cents a share on revenue of $1.44 billion, ahead of estimates of about 48 cents and $1.38 billion, SiliconANGLE reported. Arm guided to adjusted earnings of 56 cents, plus or minus 4 cents, on revenue of $1.54 billion, plus or minus $50 million. Its shares slipped about 2% to 4% after hours, according to SiliconANGLE and Reuters.

Asian chip stocks fell Thursday as investors weighed the Qualcomm and Arm results, Reuters reported.

Sources: Qualcomm, SiliconANGLE, CNBC, Reuters.