Qualcomm Q4 Earnings Call Highlights

Key Points

• Qualcomm reported Q4 non-GAAP revenue of $10.4 billion and earnings of $2.17 per share, with revenue at the high end of guidance. For Q1, it forecast revenue of $10.4 billion–$11.2 billion and earnings of $2.15–$2.35 per share.
• The company is accelerating its shift beyond handsets, targeting $5 billion in data center revenue in fiscal 2027 and $15 billion by fiscal 2029. Its AWS agreement represents a potential opportunity of up to $60 billion over 10 years, though Qualcomm said supply may limit growth beyond its 2027 target.
• Automotive revenue rose 89% year over year to $2 billion in Q4, while Qualcomm expects automotive, IoT, and data center revenue combined to grow more than 60% in fiscal 2027. Handset demand remains a pressure point: Qualcomm expects Q1 handset revenue to decline sequentially by a mid-single-digit percentage.

Qualcomm NASDAQ: QCOM reported fiscal fourth-quarter revenue at the high end of its guidance and projected a sharp increase in non-handset business in fiscal 2027, as data center shipments begin to ramp and automotive demand grows.

The chipmaker reported non-GAAP revenue of $10.4 billion and non-GAAP earnings of $2.17 per share for the quarter. For fiscal 2026, non-GAAP revenue was $43.2 billion, including $37.2 billion from its QCT chip business.

President and CEO Cristiano Amon said Qualcomm enters the new fiscal year with several uncertainties behind it, including major licensing renewals and the timing of Apple’s modem transition. The company’s planning assumes global handset units will be flat to down in calendar 2027.

Data center ramp drives diversification

Qualcomm reiterated its target of $5 billion in data center revenue for fiscal 2027 and expects more than $650 million in the December quarter. CFO and COO Akash Palkhiwala said the company expects the business to grow through the year and exit fiscal 2027 at an annualized revenue run rate of approximately $7 billion.

Palkhiwala said most of the fiscal 2027 data center target will come from custom silicon for AI accelerators at two hyperscaler customers, with connectivity contributing a material portion. Amon identified Amazon as one of the two customers and said Qualcomm also has another accelerator customer and additional prospects.

Qualcomm expects data center revenue to reach $15 billion in fiscal 2029, part of a broader target of $40 billion in non-handset revenue that year. Palkhiwala said the company is positioned to supply its $5 billion target for fiscal 2027, but supply rather than demand would likely constrain any upside beyond that figure.

The company also said its long-term strategic agreement with Amazon Web Services represents a potential revenue opportunity of up to $60 billion over 10 years. Custom accelerators began shipping in October, Amon said, while connectivity solutions with AWS are expected to ramp later in November.

Automotive growth offsets handset pressure

Fourth-quarter QCT revenue rose 6% sequentially to $9 billion. Handset revenue was $5.1 billion, reflecting the effect of industry-wide memory dynamics on the smartphone market, Palkhiwala said.

Automotive revenue reached $2 billion for the quarter, up 89% from a year earlier, while Internet of Things revenue rose 4% to $1.9 billion. Qualcomm exited fiscal 2026 with automotive revenue at an annualized run rate of approximately $8 billion, above the $7 billion expectation it provided the prior quarter.

Amon attributed automotive growth primarily to design wins converting into revenue and increased computing content in vehicles. Commercial shipments of Qualcomm’s fifth-generation Snapdragon Digital Chassis began in the September quarter and are expected to continue ramping in fiscal 2027.

Qualcomm expects combined automotive, IoT and data center revenue to grow more than 60% year over year in fiscal 2027, with non-handset businesses accounting for more than half of QCT revenue for the year.

In handsets, Amon said the June quarter marked the low point for Qualcomm’s China Android business, with sequential growth in the September quarter. Palkhiwala said the company also expects growth in the December quarter. Asked whether customers could be buying ahead of price increases, Amon said increases have largely been applied to newer platforms and phones, making them less subject to pre-buying.

First-quarter outlook and licensing

For the first fiscal quarter, Qualcomm forecast revenue of $10.4 billion to $11.2 billion and non-GAAP earnings of $2.15 to $2.35 per share. It expects QCT handset revenue to decline by a mid-single-digit percentage sequentially, as Android growth is offset by the continued decline in Apple product revenue.

The company projected a QCT earnings-before-tax margin of 20% to 22%, including a three-percentage-point effect from adding data center to the segment in fiscal 2027. Palkhiwala said custom silicon is expected to benefit QCT operating margins but dilute gross margins. Qualcomm’s long-term QCT margin target remains 30%.

Qualcomm also completed long-term licensing agreements with Apple, Huawei and Transsion. Palkhiwala said the licensing business’s revenue run rate and long-term forecast remain unchanged, and that Qualcomm held rates and royalties in the renewals.

SpaceX agreement and Arm litigation

Amon said SpaceX selected Qualcomm to supply technology for Starlink Mobile’s planned nationwide terrestrial 5G network in the United States. Deployment is expected to begin in 2027; revenue should begin appearing as Qualcomm exits fiscal 2027, with a more substantial contribution in fiscal 2028, he said.

Amon also addressed Qualcomm’s litigation with Arm, saying a jury found that Arm breached its architecture license agreement with Qualcomm and engaged in unfair competition. Asked about the pending remedies phase, Amon said he saw no implications for Qualcomm’s CPU roadmap.

About Qualcomm (NASDAQ:QCOM)

Qualcomm Incorporated is a technology company that develops and commercializes wireless communications and semiconductor technologies. Through Qualcomm Technologies, Inc, the company designs integrated circuits, system software and related platforms used in smartphones, personal computers, automobiles, industrial equipment, consumer devices and other connected products. Its Snapdragon platforms support mobile computing, connectivity, artificial intelligence and multimedia applications, while its broader portfolio includes radio-frequency systems, networking and edge-computing technologies.

Qualcomm also operates a significant technology-licensing business through its Qualcomm Technology Licensing segment.

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