Qualcomm Revenue Falls 7% as Handset Sales Drop 26%, Shares Slip 5.1% After Hours

Qualcomm reported fiscal fourth-quarter results after the close today, Nov. 4, and the market did not like the mix. Revenue fell 7% from a year earlier to $10.4 billion, above the $10.1 billion analysts tracked by FactSet expected. The stock was down 5.1% in extended trading.

The problem is the phone business. Handset revenue fell 26% to $5.1 billion, slightly under the $5.2 billion analysts projected. Handsets are still most of the company's chip sales.

Apple and memory costs

Two forces are squeezing that unit. Apple has been moving its modems over to custom designs, which means a gradual loss of Qualcomm business.

Higher memory-component prices are also hitting the broader consumer-electronics industry. Those costs can eat into profits, and they weigh on smartphone demand.

Bernstein analyst Stacy Rasgon said ahead of the report that the supply chain "seems to indicate a markedly worsening environment given the current memory dynamics." He said Qualcomm's results "still need a reset before we get there," meaning before data center growth can lift earnings.

Guidance

For the December quarter, Qualcomm guided to revenue of $10.4 billion to $11.2 billion. The midpoint tops the $10.5 billion analysts were looking for.

Adjusted earnings guidance of $2.15 to $2.35 per share has a midpoint one cent below consensus. That is a thin miss, but it sits next to a stock that was already under pressure.

The pitch: life after handsets

Amon framed the quarter as a handoff. "Fiscal 2027 marks the start of our non-handset revenue inflection, including the ramp of our Data Center business," he said in a statement. Qualcomm expects non-handset revenue to grow more than 60% year over year in the fiscal year that began at the end of September.

There is evidence the diversification is real outside of data centers. Automotive revenue jumped 89% to a record $1.99 billion, and the company said combined automotive and IoT revenue grew 36% from a year ago. Qualcomm also reiterated its fiscal 2027 data center revenue target of $5 billion, and announced a collaboration with Amazon on AI infrastructure.

Rasgon, for his part, said the push beyond smartphones has been working, pointing to the car and IoT businesses and the company's AI accelerator cards for running models. He sees a chance for data center growth to drive earnings higher beyond the current fiscal year.

What Qualcomm has actually shown in data centers

Qualcomm left the data center market in 2018 to focus on phones and signaled a return in August 2025. Its current lineup includes the Dragonfly C1000 CPU and the AI200 and AI250 inference accelerators, due in 2026 and 2027. Inference is the work of running an already-trained AI model, which is a narrower and faster-growing slice than the training market Nvidia dominates.

The disclosed customers are few. Saudi Arabia's HUMAIN committed to deploy 200 megawatts of Qualcomm AI systems starting in 2026. Analysts estimated that at roughly $2 billion in revenue, though the companies did not disclose a contract value.

On the April 29 earnings call, Amon said Qualcomm was working with an unnamed hyperscaler on custom silicon. "We're really thinking about a multi-generation engagement," he said, adding that initial shipments were slated for December. He declined to identify the customer.

At its June investor day, Qualcomm set a target of more than $15 billion in annual data center revenue by fiscal 2029, as part of a $40 billion non-handset goal. The company has also bought its way into the segment. Alphawave Semi cost $2.4 billion, and the Modular software deal closed in July at roughly $3.1 billion based on Qualcomm's share price at closing, below the roughly $3.9 billion value announced in June.

The gap to close

The numbers leave a wide span. Qualcomm is guiding to $5 billion in data center revenue in a fiscal year that is already five weeks old, from a business that was described in June as essentially zero today. Fiscal 2029's $15 billion target is built on a roadmap of products arriving through 2028.

Qualcomm is a roughly $183 billion company, per 24/7 Wall St. Its handset slide is happening now, and the replacement revenue is mostly still ahead of it.

The next concrete marker is the custom silicon shipment to the unnamed hyperscaler, which Amon said is slated for December. Qualcomm's December-quarter results, guided to $10.4 billion to $11.2 billion in revenue, will show how much of the non-handset ramp has started to appear.