Qualcomm’s stock experienced a significant drop in after-hours trading following the release of its first-quarter fiscal 2026 earnings. While the company surpassed analyst expectations for the quarter, its forward-looking guidance fell short, primarily due to concerns surrounding the global memory chip shortage.
Qualcomm reported fiscal first-quarter earnings per share of $3.50, beating the consensus estimate of $3.41. Revenue for the quarter came in at $12.25 billion, slightly above the expected $12.21 billion. However, the company’s outlook for the second quarter painted a less optimistic picture.
Qualcomm projected second-quarter adjusted earnings per share to be between $2.45 and $2.65, significantly below the LSEG consensus estimate of $2.89 per share. Revenue guidance was set between $10.2 billion and $11 billion, also falling short of the $11.11 billion analysts had anticipated.
Qualcomm executives attributed the shortfall in guidance directly to the ongoing global memory shortage. The high demand for memory chips in data centers is consuming production capacity, which in turn affects the availability of memory for smartphones and other consumer electronics. This scarcity is forcing smartphone manufacturers, who procure their own memory to pair with Qualcomm’s processors and modems, to closely monitor and adjust their purchasing and inventory levels.
“We’re starting to see that memory is going to define the size of the mobile market,” stated Qualcomm CEO Cristiano Amon. He added that while handset demand remains robust and the smartphone market is undergoing an upgrade cycle, Qualcomm anticipates supply chain issues related to memory availability. Amon suggested that customers might focus on higher-tier devices, which are better positioned to absorb potential price increases for memory.
Despite the challenges in the smartphone sector, Qualcomm’s other business segments demonstrated strong performance. Handset sales saw a 3% year-over-year increase, contributing $7.82 billion to the quarter’s revenue. The Internet of Things (IoT) group, which includes chips for industrial applications and smart glasses, grew by 9% to $1.69 billion in sales. Qualcomm’s automotive business also experienced significant growth, rising 15% to $1.1 billion, driven by chip sales to car manufacturers.
Qualcomm also anticipates its new AI chips and other data center products to begin contributing to sales in fiscal year 2027. The company reiterated that its long-term financial targets, including substantial revenue growth in its automotive and IoT businesses by fiscal year 2029, remain on track.