Qualcomm's stock falls as memory woes weigh on earnings

By Britney Nguyen

The chip company came up short on its bottom line

Qualcomm reported fiscal third-quarter earnings on Wednesday.

Inflated memory prices are proving a thorn in Qualcomm's side.

The semiconductor company came up short with its latest profit figures and missed expectations with its guidance on the metric as well. In a statement, CEO Cristiano Amon called out "a challenging memory and supply environment."

Qualcomm's (QCOM) adjusted earnings of $2.21 a share for the June quarter slightly missed analyst estimates for $2.23 a share. And its outlook for adjusted EPS of between $2.05 and $2.25 for its current September quarter came in below the $2.38 that analysts tracked by FactSet were forecasting.

That overshadowed its top-line performance, as Qualcomm reported revenue of $9.9 billion for the June quarter - down 4% from a year ago, but ahead of the FactSet consensus for $9.7 billion.

Amon said Qualcomm expects growth for its nonhandset revenues, including data-center revenues, to increase from 24% in fiscal-year 2026 to more than 60% in fiscal-year 2027. He said the company is set up to follow through on its outlook for nonhandset revenues to reach $40 billion by fiscal-year 2029.

Qualcomm is guiding for revenue of between $9.7 billion and $10.5 billion for its current fiscal fourth quarter, which at the midpoint is in line with the $10.1 billion analysts tracked by FactSet were looking for.

Shares of Qualcomm fell 4.7% in after-hours trading following Wednesday afternoon's report.

One question investors have is whether Android revenue in China reached a trough in June and will return to growth in the next quarter, Benchmark analyst Cody Acree said in a note ahead of the report. Although there's caution around Qualcomm's handset revenue given cyclical weakness in the smartphone market, Acree said those concerns should be offset by gains in its other businesses, including automotive and technology licensing.

Another area of investor interest is what Qualcomm will say about imminent price increases, Acree noted. Amon told CNBC that the company plans to raise prices across its chip offerings starting on Sept. 1.

Additionally, Acree said investors will be listening for any new "tangible evidence" Qualcomm provides about its guidance for $5 billion in data-center revenue in fiscal-year 2027.

-Britney Nguyen

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07-29-26 2020ET