Qualcomm earnings: fourth quarter of fiscal 2026

The quarter in brief

Qualcomm designs the chips inside many of the world's smartphones and earns licence fees on the patents behind mobile networks. In the last quarter of its 2026 financial year, its sales fell 8% to $10.3 billion.¹ Phones were the cause. Phone-chip sales dropped 26% to $5.1 billion, while chips for cars reached a record of almost $2 billion.¹

Profit fell much faster than sales. Operating profit, the profit from running the business before interest and tax, more than halved to $1.36 billion as costs rose while sales fell.¹ On the company's own adjusted measure, which strips out one-off items, earnings per share (net income divided by the number of shares) fell 28% to $2.17 from $3.00.¹

The reported figure points the other way: $1.17 a share, against a loss of $2.89 a year earlier.¹ That is not better trading. Last year's quarter carried a $6.1 billion tax charge that turned it into a loss, and this year's reported profit before tax actually fell 61%.¹

The figures, as the company printed them

Against what analysts expected

Analysts, on average, had expected earnings of $1.46 a share.² Qualcomm reports two figures, and the analysts' number sits much closer to the reported one than to the adjusted one, which suggests it was built on reported profit. So the adjusted figure is left aside here and the reported $1.17 a share is the one set against it.¹ Reported earnings came in about 20% below what analysts expected.

What the company expects

For the first quarter of its 2027 financial year, Qualcomm expects sales of $10.4 billion to $11.2 billion.¹ There is no earlier figure for that quarter to compare it with.

For 2027 as a whole, it expects sales outside phone chips to grow by more than 60%. Its chief executive calls the year the start of a turn upward for that part of the business.¹ It kept, unchanged, its target of $5 billion of sales from data centres in 2027.¹

It also says the cost of making chips is rising across the industry, and it is raising its own prices to cover this.¹ It now expects the full benefit to show in its chip division's gross margin (what is left of each dollar of sales after the direct cost of making what was sold) in the second half of the 2027 financial year.¹ Three months ago it said only that the benefit would come over time as prices gradually changed. The new part is the timetable.³ By its own account, higher costs arrive before the higher prices do.

Reaching all of this depends on data-centre customers taking chips in large quantities within a year, on car and device sales growing further from a record, and on customers accepting the price increases.

The strong points

Car chips are the clearest success. Sales rose 89% from a year earlier to a record $1.99 billion.¹ Together with chips for connected devices, that business grew 36%, and the chief executive named it as a main driver of the quarter.¹ Qualcomm has long tried to show it can grow without leaning on phones. A business approaching $2 billion a quarter makes that case with sales rather than plans.

Alongside the results, Qualcomm announced a partnership with Amazon to develop several generations of products for AI data centres.¹ That is a new customer in a new market for the company. It gives a name to the $5 billion data-centre target, though it is an agreement to develop products, not yet a source of sales.

Sales also finished at the high end of what the company had said to expect. Three months earlier it gave a range of $9.7 billion to $10.5 billion, and on its adjusted measure sales came to $10.44 billion.¹³ That adjusted figure is $120 million above reported sales. Even so, the quarter did not fall short of the company's own expectations despite the slump in phones.¹

The weak points

Phones are still Qualcomm's largest business. Phone-chip sales fell 26% in the quarter to $5.14 billion and 13% over the year.¹ Growth in car chips covered only part of that loss, which is why total chip sales fell 8%.¹ The company's case for the future rests on businesses that have not yet replaced what phones are losing.

Underlying profit fell hard, and not only because sales were lower. Costs went the other way. Research spending rose 13% to $2.68 billion, selling and administrative costs rose, and a new $235 million restructuring charge appeared, all while sales fell.¹ In the chip business, profit before tax shrank to 24% of sales from 29%, and fell 26% in amount.¹ Because that is the larger of Qualcomm's two businesses, its shrinking profit drives the whole decline. Even the licensing business earned slightly less on each dollar, keeping 70% of sales as profit before tax against 72% a year earlier.¹

Cash weakened too. Cash from running the business fell by about a fifth over the year, to $11.1 billion from $14.0 billion, even as reported profit rose.¹ Most of the difference went into unsold stock: inventories absorbed $2.05 billion of cash, against $138 million a year earlier.¹ The company still paid out $11.67 billion in buybacks and dividends, more than its operations produced. Its cash fell to $4.64 billion from $7.84 billion.¹

What to watch

The first signal is what phone makers do with their orders and their stocks of chips. If they keep cutting orders and running down the chips they already hold, the phone slump is still deepening. If orders steady while their stocks stay lean, the fall is nearer its floor. Qualcomm's own inventory points the same way: if it keeps climbing, chips are being made faster than they are bought.

The second is whether Amazon and other data-centre operators place orders in volume. The spending plans that large cloud companies set out for their data centres, and any further named customers, would show whether the $5 billion target rests on real demand rather than on intentions.

The third is prices. The rates that chip factories charge for their work, and whether phone makers accept Qualcomm's increases without cutting orders, will show whether the pressure on its gross margin eases on the timetable it has set. The next results will be a check on all three, but these signals move first.

Our verdict on the quarter

In all, a weak report. Sales and underlying profit both fell, and cash weakened with them. The bright spots, cars and the new work with Amazon, are genuine, but this quarter they softened the fall rather than reversed it, and the gap left by phones is still open. What would change that judgement is not a single good number but the three signals moving together: phone makers' orders steadying, data-centre work turning into orders, and customers paying Qualcomm's higher prices without buying less. Until then, this is a company describing a transition more than showing one.

Notes

1. Qualcomm's results release, 4 November 2026: sec.gov. ↩
2. Nasdaq's earnings calendar, 4 November 2026. ↩
3. Qualcomm's previous results release, 29 July 2026: sec.gov. ↩