Qualcomm Incorporated (NASDAQ: QCOM) shares fell more than 10% to $155.22 in Thursday premarket trading after the chipmaker reported a 26% decline in fiscal fourth-quarter handset revenue and forecast a lower earnings-before-tax margin for its QCT semiconductor segment in the current quarter.
Handset revenue totaled $5.14 billion in the fiscal fourth quarter ended September 27, down from $6.96 billion a year earlier and below the $5.25 billion expected by analysts surveyed by Visible Alpha. The decline came as smartphone manufacturers faced higher memory costs and weaker demand.
Qualcomm projected adjusted earnings of $2.15 to $2.35 per share for the first quarter of fiscal 2027. The $2.25 midpoint was slightly below the $2.27 analyst consensus. However, the company’s revenue forecast of $10.4 billion to $11.2 billion had a midpoint of $10.8 billion, exceeding the $10.48 billion consensus estimate.
The company also expects an earnings-before-tax margin of 20% to 22% for its QCT semiconductor segment, compared with 24% in the reported fourth quarter. The outlook includes costs associated with bringing Qualcomm’s data-center operations into the segment.
Memory Shortages Prompt Handset Makers to Revise Build Plans
Qualcomm’s annual filing attributed much of its fiscal 2026 handset revenue decline to fewer chipset shipments to certain major customers. Those customers had revised build plans to reduce inventories amid memory supply constraints and higher prices.
The company warned that these constraints could continue to weigh on demand from handset customers and its financial results.
Chief Financial Officer Akash Palkhiwala said fourth-quarter handset revenue reflected industry-wide memory pressures. He expects handset revenue to fall by a mid-single-digit percentage sequentially in the current quarter. Growth in Android-related sales is expected to be offset by a decline in revenue from Apple, which is shifting toward internally developed modem chips.
Qualcomm’s overall fourth-quarter non-GAAP revenue fell 7% to $10.44 billion, above analysts’ estimate of $10.11 billion. Adjusted earnings declined to $2.17 per share from $3 a year earlier, but remained slightly above the consensus estimate of $2.16 per share.
Automotive revenue increased 89% to $1.99 billion, while Internet of Things revenue rose 4% to $1.89 billion. These gains partially offset declining handset revenue, which remained QCT’s largest revenue category. Overall QCT revenue fell 8% to $9.02 billion.
Data-Center Shift Weighs on QCT Margin Outlook
During an earnings call, Palkhiwala explained that the QCT margin forecast includes a three-percentage-point impact from adding Qualcomm’s data-center business to the segment in fiscal 2027.
The impact reflects investments in AI accelerator and processor platforms ahead of their expected revenue growth. He said the revised segment reporting structure does not affect company-wide guidance or Qualcomm’s long-term QCT earnings-before-tax margin target of 30%.
Qualcomm expects data-center revenue to exceed $650 million in the first quarter of fiscal 2027, above the $539.1 million consensus estimate from analysts surveyed by Visible Alpha. The company also reaffirmed its $5 billion data-center revenue target for the full fiscal year.
Management expects its custom data-center chip programs to improve QCT operating margins while reducing gross margins, reflecting different profitability characteristics within the business.
Separately, Qualcomm is raising chip prices to offset higher semiconductor manufacturing costs, including wafer fabrication, assembly, testing, and advanced packaging expenses. The company expects these price increases to fully benefit QCT gross margins in the second half of fiscal 2027.
Qualcomm Stock Performance and Barclays Price Target Cut
Qualcomm’s premarket decline followed a 5.33% gain in Wednesday’s regular session, when shares closed at $173.19. At $155.22 in premarket trading, the stock was about 40% below its 52-week high of $259.92.
Barclays analyst Tom O’Malley also lowered his Qualcomm price target to $150 from $180 early Thursday while maintaining an Underweight rating.
Meanwhile, Qualcomm Tokenized bStocks (QCOMB) was trading at $155.81, down 5% over the preceding 24 hours, according to CoinMarketCap. QCOMB is a tokenized product, and its 24-hour price change is not directly comparable to the Nasdaq-listed stock’s premarket decline.