QUALCOMM Incorporated

Qualcomm reported fiscal Q3 revenue of $9.9 billion, non-GAAP EPS of $2.21, QCT revenue of $8.5 billion, and licensing revenue of $1.3 billion. QCT handset revenue was $5.1 billion; QCT IoT revenue was $1.8 billion, up 9% year over year; and QCT automotive revenue was $1.6 billion, up 61% year over year. Total non-handset QCT revenue grew 28% year over year. The company returned $2.3 billion to stockholders, including $1.4 billion in buybacks and $937 million in dividends. For Q4, management guided revenue of $9.7 billion to $10.5 billion and non-GAAP EPS of $2.05 to $2.25. QCT guidance was $8.4 billion to $9.0 billion of revenue with 23% to 25% EBT margin; QTL guidance was $1.2 billion to $1.4 billion of revenue with 68% to 72% EBT margin. QCT handset revenue was expected to be about $5.2 billion, QCT IoT about flat year over year, and QCT automotive about 60% year-over-year growth. Management said QCT gross margins would be slightly below historical range in the near term, but pricing actions should realign margins over time. They also said data center revenue starts in the December quarter and that non-handset growth should inflect in fiscal 2027.

Cristiano Amon framed the quarter as evidence that Qualcomm’s diversification strategy is taking hold, highlighting data center, automotive, industrial, and new AI-enabled devices as the next chapter of the company. He emphasized that the company is entering data center at the right time, with product lines rolling out over the next two years, and said the modular acquisition strengthens Qualcomm’s software stack for AI deployments. His tone was confident and strategic, but he also acknowledged that investors still want more proof points on data center execution.

Akash Palkhiwala focused on the financial drivers behind the quarter and the guide. He pointed to QCT handset softness from memory-driven demand weakness, record automotive revenue of $1.6 billion, and 28% year-over-year growth in total non-handset QCT revenue. He also said Qualcomm returned $2.3 billion to shareholders and raised prices broadly across end markets in response to higher input costs, expecting the benefits to show up over the next couple of quarters. He quantified the gross margin bridge, saying the baseline QCT gross margin range has been 48% to 50%, while data center custom chip revenue should be a 1.5% to 2% drag on weighted average QCT gross margin.

Analysts pressed on gross margin pressure, pricing, and the timing/shape of data center revenue. Management said margin pressure comes from both weaker premium-tier mix and higher supply-chain costs, and that double-digit price increases are being phased in gradually as contracts and product cycles roll over. On data center, they confirmed two custom chip engagements will start generating revenue in the December quarter and said the ramp should build through fiscal 2027, with more customer opportunities possible once silicon demonstrations are available. They also explained that Apple revenue will fall faster than previously expected because Qualcomm’s share for the upcoming iPhone launch is materially below the prior 20% estimate.