Qualcomm Q1 2026 Earnings Report

Qualcomm’s Q1 Earnings Beat Estimates, But Guidance Falls Short Amid Global Memory Crunch

Qualcomm posted better-than-expected earnings for its fiscal first quarter, yet its forward-looking guidance disappointed investors, largely due to persistent global memory shortages. The chipmaker’s stock experienced a dip of as much as 10% in after-hours trading following the announcement.

The company reported adjusted earnings per share of $3.50, surpassing the LSEG consensus estimate of $3.41. Revenue also edged past expectations, coming in at $12.25 billion against the anticipated $12.21 billion.

However, the outlook for the current quarter presented a challenge. Qualcomm projected adjusted earnings per share between $2.45 and $2.65, with revenue anticipated to range from $10.2 billion to $11 billion. This forecast fell short of analyst expectations, which called for $11.11 billion in sales and earnings of $2.89 per share.

Qualcomm executives pointed directly to the global memory shortage as the primary driver behind the weaker-than-expected guidance. The intense demand for data center memory is consuming production capacity that would otherwise be allocated to memory for smartphones and other consumer electronics. This constraint directly impacts Qualcomm’s ability to fulfill orders for its core products.

Customers in the smartphone sector, who are responsible for sourcing their own memory and integrating it with Qualcomm’s processors and modems, are meticulously managing their inventory levels and adjusting their purchasing decisions based on memory availability. This ripple effect directly influences Qualcomm’s sales figures.

“We’re starting to see that memory is going to define the size of the mobile market,” stated Qualcomm CEO Cristiano Amon in an interview. He elaborated that while underlying demand for handsets remains robust, and the smartphone market is undergoing an upgrade cycle, Qualcomm anticipates significant supply-side challenges directly tied to memory constraints.

Amon indicated that it remains uncertain whether smartphone manufacturers will pass on increased memory costs to consumers. However, he anticipates that Qualcomm’s clients will likely prioritize higher-tier devices, which possess a greater capacity to absorb price hikes in memory components compared to budget-friendly models. Qualcomm, he noted, is particularly competitive in the premium smartphone segment.

“We see this as an industry issue affecting everything in consumer electronics,” Amon remarked, underscoring the broad impact of the memory shortage across the technology landscape.

Looking at segment performance, Qualcomm’s handset revenue for the quarter reached $7.82 billion, marking a 3% increase year-over-year. Overall company revenue saw a 5% jump.

The company’s less established business segments demonstrated stronger growth. The Internet of Things (IoT) division, which encompasses chips for industrial applications and components for consumer devices like Meta’s Ray-Ban smart glasses, reported a 9% increase in sales, totaling $1.69 billion. Qualcomm’s automotive segment, supplying chips to automakers including Toyota, also experienced significant growth, with revenues rising 15% to $1.1 billion.

Qualcomm has signaled its expectation for revenue from its emerging data center business, driven by its new AI chips and other data center products, to begin contributing meaningfully in fiscal year 2027. “Everything is on track,” Amon confirmed during the earnings call.

Net income for the quarter was reported at $3 billion, or $2.83 per diluted share, compared to $3.18 billion, or $2.83 per diluted share, in the same period last year.

Beyond chip manufacturing, Qualcomm also generates substantial revenue through the licensing of its intellectual property, particularly for technologies like 5G. This segment, reported under QTL revenues, is known for its higher profitability compared to hardware sales. In the reported quarter, QTL revenues amounted to $1.59 billion.