Qualcomm Inc Earnings - Q4 2025 Analysis & Highlights
Qualcomm delivered record Q1 2026 results driven by strong flagship handset demand and automotive growth, though near-term handset guidance was tempered by DRAM supply constraints impacting the broader industry. The company is diversifying beyond smartphones into automotive, robotics, industrial IoT, and data center opportunities while maintaining disciplined capital allocation.
Key Financial Results
Total revenues reached $12.3 billion, a record for the company, with non-GAAP earnings per share of $3.50, also a record and at the high end of guidance.
QCT (Qualcomm CDMA Technologies) revenues hit a record $10.6 billion, driven by strength in flagship handsets, automotive, and IoT.
QCT handset revenues reached a record $7.8 billion, reflecting the benefit of recently launched flagship smartphones.
QTL (Qualcomm Technology Licensing) revenues were $1.6 billion with an EBT margin of 77%, both at the high end of guidance, driven by higher units and favorable mix.
QCT EBT margin of 31% came in line with expectations and exceeded the long-term target of 30%.
Business Segment Results
QCT Automotive delivered another record quarter with revenues growing to $1.1 billion, up 15% versus the year-ago period, driven by increased demand for Snapdragon Digital Chassis platforms.
QCT IoT revenues of $1.7 billion grew 9% year-over-year, driven by demand across consumer and networking products.
Global consumer demand for handsets, especially premium and high tier, exceeded expectations with healthy sell-through observed through fiscal Q1 and the first few weeks of 2026.
Samsung's upcoming family of premium tier devices is expected to achieve approximately 75% share, consistent with prior expectations.
ByteDance launched the first agentic AI smartphone powered by the Snapdragon 8 Elite during the quarter, marking a significant milestone in the transition toward AI-native smartphones.
Capital Allocation
The company returned $3.6 billion to stockholders, including $2.6 billion in stock repurchases and $949 million in dividends.
Industry Trends and Dynamics
Memory supply constraints are significantly impacting the handset industry, with DRAM availability for consumer electronics down year-over-year due to prioritization of HBM (High Bandwidth Memory) for data centers.
Memory suppliers are redirecting manufacturing capacity to HBM to meet AI data center demand, resulting in industry-wide memory shortage and price increases likely to define the overall scale of the handset industry through the fiscal year.
Several handset OEMs, especially in China, are taking a cautious approach in reducing their chipset inventory in response to memory constraints.
The premium and high tier smartphone segments continue to expand even in a relatively flat overall handset market, with OEMs adopting dual flagship product strategies.
Demand for Snapdragon Digital Chassis solutions remains incredibly strong, with several collaborations announced with top automakers, OEMs, and service providers during the quarter.
The physical AI and robotics space is experiencing rapid growth, driven by advances in edge AI and sensor fusion.
Competitive Landscape
Qualcomm is well-positioned in premium and high-tier smartphone segments with broad OEM adoption for dual flagship product strategies.
The company has engaged with seven of the nine largest cloud companies globally and more than 40 personal AI devices are in production or development.
18 Snapdragon-powered PCs debuted at CES from ASUS, HP, Lenovo, and Microsoft, with the Asus ZenBook A16 featuring the Snapdragon X2 Elite Extreme being the fastest Snapdragon-powered laptop to date.
The Snapdragon X2 Plus delivers up to 35% faster single-core performance and up to 3.5 times faster multi-core performance compared to the competition, with the Hexagon NPU providing up to 5.7 times faster inferencing versus competitors' NPU.
Qualcomm signed a Letter of Intent for a long-term supply agreement with Volkswagen Group, spanning many brands including Audi and Porsche, to provide advanced infotainment and connectivity capabilities and serve as the group's primary technology provider for its software-defined vehicle architecture.
The newly launched RAV4, Toyota's top-selling vehicle globally, is powered by Qualcomm's Snapdragon Cockpit Platform, delivering premium, AI-enabled in-vehicle experiences.
Total design wins for Snapdragon Elite platforms reached 10 programs through new and expanded collaborations with Hyundai Mobis, Leapmotor, Li Auto, Zeekr, Great Wall Motors, NIO, and Chery.
Qualcomm completed the Alphawave Semi acquisition, adding high-speed wire connectivity technologies, and acquired Ventana Micro Systems to reinforce leadership in expanding the RISC-V standard and ecosystem.
Macroeconomic Environment
Macroeconomic indicators have been strong with a stable global economic environment.
Total handset shipments exceeded expectations in the December quarter, especially in the premium and high tier segments.
Increasing demand for memory solutions in AI data centers is driving near-term uncertainty in memory supply and pricing for handset OEMs.
The handset OEM market is taking a cautious approach in planning their business due to memory constraints, with several OEMs, especially in China, taking actions to reduce their handset build plans and channel inventory.
Growth Opportunities and Strategies
Qualcomm is expanding into advanced robotics with a full suite of robotics technologies and solutions, including the Dragonwing IQ10 Series, designed to accelerate commercialization of household, industrial, and humanoid robots.
The company has engaged with multiple robotics players including Advantech, APLUX, Outer Core, Booster, Figure, KUKA Robotics, Robotech AI, and VinMotion to help define the compute architecture for their robotics and humanoid platforms.
Qualcomm is developing data center solutions and engaging with leading hyperscalers, cloud service providers, sovereign AI projects, and other global partners, with positive feedback on CPU and innovative AI processing and memory architecture for next-generation inferencing data centers.
The company introduced the Snapdragon X2 Plus, an expansion of second-generation platforms purpose-built for the enterprise and commercial segment in PCs.
Qualcomm remains on track to commercialize 150 Snapdragon X-powered PCs this year.
In industrial IoT, the company continues to expand its portfolio of advanced computing, connectivity, and AI solutions for an increasing number of verticals, including the acquisition of Augentix to augment the Dragonwing vision portfolio.
Two new Dragonwing processors were introduced at CES, delivering on-device intelligence for security-focused drones, smart cameras, industrial vision, AI TVs, media hubs, and video collaboration systems.
The launch of the Dragonwing IQ-X Series marked entry into the industrial PC space with best-in-class compute performance and efficient edge AI engineered for PLCs, advanced HMIs, edge controls, and panel and box PCs.
Financial Guidance and Outlook
For the second fiscal quarter, Qualcomm is forecasting revenues of $10.2 billion to $11 billion and non-GAAP EPS of $2.45 to $2.65.
QTL revenues are estimated at $1.2 million to $1.4 billion with EBT margins of 68% to 72%, reflecting normal sequential trend.
QCT revenues are expected to be $8.8 billion to $9.4 billion with EBT margins of 26% to 28%.
QCT handset revenues are forecasted to be approximately $6 billion as a result of the impact of memory constraints.
QCT IoT revenues are anticipated to grow by low teens percentage versus the year-ago period, driven by growth across industrial and consumer products.
QCT Automotive is expected to achieve year-over-year revenue growth greater than 35% in the second fiscal quarter, following another record quarter.
Non-GAAP operating expenses are expected to be approximately $2.6 billion in the quarter, with the sequential increase driven by typical calendar year resets for employee-related costs and completion of the Alphawave acquisition.
The company expects to return to its prior run rate and growth trajectory for QCT handset revenues when memory conditions normalize.
Qualcomm expects data center solutions to be a multibillion revenue opportunity in a couple of years, with 2027 expected to start showing revenues.
The company is on track to the commitments made on diversification revenues for fiscal 2029.
Memory Supply Constraints and Handset Market Impact
The handset industry will be constrained by the availability and pricing of memory, particularly DRAM, with memory suppliers redirecting manufacturing capacity to HBM to meet AI data center demand.
Handset OEMs are adjusting their build production to the memory they have available, with the market being sized by memory availability rather than consumer demand.
The issue is not just price but availability, with memory availability determining the overall size of the handset market.
OEMs are likely to prioritize premium and high tier products given constrained memory availability, which could be less impacted by price increases.
Qualcomm has flexibility in working with new and older versions of memory on its platforms due to multi-generation memory controllers, allowing the company to work with whatever memory is available.
The company is qualified with every memory provider, including CXMT and other smaller companies, providing flexibility versus some competitors.
