US Markets: Why Qualcomm shares are in top focus today with quarterly earnings, growth outlook amid AI costs concerns
Qualcomm shares are in focus on Wall Street on Wednesday, November 4, as the semiconductor manufacturer prepares to announce its fourth-quarter fiscal 2026 financial results after the US stock market closes. Investors will closely monitor the company's revenue, earnings and management commentary amid weakening smartphone demand, rising component costs, concerns over artificial intelligence spending, and increasing competition in the semiconductor industry.
The company's dependence on the smartphone market is emerging as a key concern. While handset chips remain Qualcomm's biggest revenue contributor, Apple's efforts to develop its own cellular modem technology and softer demand for Android smartphones are creating additional challenges for its growth prospects.
These concerns have also weighed on the company's stock performance. On Friday, October 30, Qualcomm shares plunged 11.2% following Intel's earnings announcement, which triggered broader concerns about memory shortages and weakening consumer spending in the personal computer market.
On Wednesday, Qualcomm shares were trading at $172.05, up 4.63%, or $7.62. However, the stock remained down 0.76% year to date.
Wall Street analysts expect Qualcomm to report revenue of approximately $10.15 billion for the fourth quarter, while adjusted earnings are projected at $2.16 per share.
These estimates indicate year-over-year declines of nearly 10% in revenue and 28% in adjusted earnings, reflecting weaker smartphone demand, reduced orders from Apple and higher semiconductor manufacturing costs.
Qualcomm has previously provided revenue guidance of $9.7 billion to $10.5 billion and non-GAAP diluted earnings per share of $2.05 to $2.25 for the quarter.
The company expects handset revenue to reach approximately $5.2 billion in the December quarter, representing a decline of around 25% from the corresponding period last year.
Management had also indicated that the initial contribution from data-centre products could reduce Qualcomm CDMA Technologies' weighted gross margin by 1.5 to 2 percentage points.
Qualcomm's handset business has experienced a deterioration in growth throughout the current financial year.
Handset chip revenue increased 3% year over year in the December quarter of fiscal 2026. However, the segment subsequently recorded a 13% decline in the March quarter, followed by a 20% contraction in the June quarter, when revenue fell to $5.1 billion.
The weakness was also evident in the company's third-quarter financial performance.
Qualcomm reported revenue of $9.95 billion for Q3 FY2026, down 4% year over year but above analysts' estimates of $9.66 billion. Non-GAAP earnings per share declined 20.2% to $2.21, marginally below the market expectation of $2.22.
Revenue from Qualcomm CDMA Technologies fell 5.4% to $8.5 billion. Within this division, handset revenue declined 19.6% to $5.09 billion.
Higher memory prices, supply constraints and increased component expenses have added to the pressure on smartphone manufacturers and semiconductor suppliers.
Another major concern for Qualcomm is Apple's gradual shift towards internally developed cellular modem technology.
Apple has been working to reduce its dependence on Qualcomm's modem chips by introducing its own solutions in selected iPhone models.
During its Q3 earnings conference call, Qualcomm management indicated that its share of modem supply for Apple's next-generation iPhones would be lower than previously anticipated.
The company also expects revenue from Apple-related products to decline significantly in the December quarter.
At the same time, tighter memory supplies and rising prices could affect demand from several smartphone manufacturers, further complicating Qualcomm's near-term outlook.
Despite challenges in its smartphone business, Qualcomm has secured a significant opportunity in the telecom infrastructure market.
The company announced a multi-year agreement with Elon Musk-led SpaceX to supply radio equipment, baseband units and software for Starlink Mobile's planned nationwide terrestrial 5G network in the US.
The equipment will be deployed across tens of thousands of macro cell sites, with installations expected to begin in 2027.
Although financial details of the agreement have not been disclosed, Qualcomm described it as its biggest 5G deal so far.
The partnership could strengthen Qualcomm's presence beyond smartphone processors and expand its role in telecom infrastructure, where it will compete with companies such as Marvell, Broadcom and Intel.
With a distinguished career spanning nearly two decades at the highest levels of financial journalism, Rajendra Kumar Saxena stands as a cornerstone of the editorial leadership team at Livemint.com. In his current capacity as Content Editor, he is responsible for managing the comprehensive editorial lifecycle of the publication. His role is multifaceted, encompassing the strategic selection of high-impact stories, original reporting, and meticulous editing. <br> Furthermore, Rajendra is instrumental in executing a sophisticated Search Engine Optimization (SEO)-driven content strategy, ensuring that the platform's digital content reaches a global audience while maintaining the highest standards of journalistic integrity and accuracy prior to publication. <br> Rajendra’s professional journey is characterized by a profound expertise in a wide array of critical sectors. His analytical depth covers global economics, commodities, and stock market dynamics (across both Indian and United States landscapes). <br> Beyond the financial markets, he possesses a keen understanding of political affairs, banking and finance, foreign affairs, and the rapidly evolving technology sector. <br> His eighteen years journey in financial and business journalism includes a significant tenure at Financialexpress.com and freelance contributions to The Hindu. <br> Currently based in Delhi, Rajendra holds a Master of Journalism degree from the prestigious Makhanlal Chaturvedi National University of Journalism and Communication (MCNUJC). His blend of academic rigor and decades of on-the-ground experience makes him a leading voice in navigating the complexities of today’s financial world.
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