Qualcomm Earnings Summary - Q3 2026

Overview

Qualcomm reported its Q3 2026 earnings, which led to a significant decline in its stock price, dropping over 10% at the market open. Despite a slight beat on profit expectations, the overall results were perceived as weak by investors.

Financial Results

• Revenue: Fell 7% year-over-year to USD 10.44 billion, surpassing market expectations of USD 10.15 billion.
• Adjusted Net Profit: Decreased by 28% year-over-year to USD 2.33 billion.
• EPS: Reported at USD 2.17, closely aligning with analysts' targets.
• EBT Margin: Slipped by 5 percentage points year-over-year to 24%.

Segment Performance

The breakdown of revenue by segment highlighted significant challenges:

• Smartphone Chips: Revenue fell to USD 5.14 billion, a decline of 26% year-over-year.
• Automotive Chips: Performed well with an 89% increase in sales to USD 1.99 billion.
• Overall Impact: The decline in smartphone revenue was approximately USD 1.82 billion, while automotive and IoT segments contributed an additional USD 1.02 billion.

Future Guidance

Management's outlook for the upcoming quarters is mixed, indicating no immediate rebound in profits but some long-term optimism:

• Q4 2026 Revenue Guidance: Expected between USD 10.4 billion and USD 11.2 billion, with an adjusted EPS forecast of USD 2.15 to USD 2.35.
• Consensus Comparison: The midpoint revenue estimate of USD 10.8 billion is above the consensus of USD 10.5 billion, while the EPS midpoint of USD 2.25 is slightly below the expected USD 2.26.
• EBT Margin Expectation: Projected to be between 20% and 22%, with some pressure due to the inclusion of the Data Center business and preemptive investments.
• New Revenue Sources: Management anticipates over USD 650 million in data center sales in the next quarter and maintains a target of USD 5 billion for FY2027.
• Smartphone Sales Outlook: A further decline is expected due to the phase-out of product shipments to Apple, although renewed licensing agreements with major companies like Apple and Huawei provide a separate revenue stream.