Warning of a potential downturn in its smartphone chip business, Qualcomm’s shares plunged nearly 10%.

(New York, Feb 5)
Although Qualcomm delivered better-than-expected results for the first quarter of fiscal year 2026 (ended Dec 28), its forward-looking guidance fell short of market expectations, sending its shares sharply lower in after-hours trading.

Qualcomm said the outlook was weighed down by tight memory chip supply, which has constrained smartphone shipments and negatively impacted its handset chip business.

For the quarter, revenue rose 5% year-on-year to US$12.3 billion, beating analysts’ estimate of US$12.21 billion. Net profit came in at US$3.0 billion, slightly lower than US$3.18 billion a year earlier, while earnings per share (EPS) slipped to US$2.78 from US$2.83 previously.
Excluding one-off items, adjusted EPS stood at US$3.50, exceeding the consensus forecast of US$3.41.

Risks within the largest revenue segment

Qualcomm’s core business lies in smartphone chipsets, making its performance closely tied to global smartphone demand. Major customers include Apple and Samsung, two of the world’s largest smartphone manufacturers.

The communications technologies segment remained Qualcomm’s biggest revenue contributor, generating US$10.61 billion in the quarter, up 5% year-on-year and slightly above Wall Street estimates.

Within the segment, handset chip revenue grew 3% to US$7.82 billion, falling short of expectations of US$7.87 billion. Automotive chip revenue surged 15% to US$1.1 billion, while IoT chip revenue climbed 9% to US$1.69 billion.

Looking ahead, Qualcomm warned that memory shortages and rising prices could increase costs for smartphone makers, potentially leading to more cautious order placements. The company guided for second-quarter revenue of US$10.2–11.0 billion, below the Street’s estimate of US$11.11 billion. Adjusted EPS is projected at US$2.45–2.65, also below analysts’ expectation of US$2.89.

Qualcomm shares rose 1.16% to US$148.89 during regular trading on Wednesday (Feb 4), but plunged 9.62% to US$134.57 in after-hours trading following the guidance announcement.