Qualcomm (NASDAQ: QCOM) has quietly secured the largest artificial intelligence deal in its history, striking an agreement with ByteDance to supply millions of ASICs for data centers and AI agent software.
The ByteDance deal includes powering the Doubao chatbot, a development that sent QCOM shares surging 11.6% in a single trading session when the news broke, as reported by Congress.net.
CEO Cristiano Amon told investors on the Q2 earnings call that the “leading hyperscaler custom silicon engagement is on track for initial shipments later this calendar year.”
The agreement validates Qualcomm’s $2.4 billion Alphawave Semi acquisition and signals the company has secured a customer with genuine volume for its data center pivot.
While the AI headline dominated attention, Qualcomm’s automotive segment delivered a record $1.326 billion in Q2 FY26 revenue, representing 38% growth year over year.
The IoT segment contributed $1.726 billion in the same quarter, up 9%, with automotive and IoT combined growing 20% year over year.
Despite memory supply constraints and softness among Chinese OEM handset customers, Qualcomm still beat estimates with $10.599 billion in revenue and $2.65 in non-GAAP EPS, marking the fourth consecutive quarter of beating both lines.
Management issued Q3 guidance of $9.2 billion to $10 billion in revenue and $2.10 to $2.30 in non-GAAP EPS, with Chinese handset revenues expected to bottom in Q3 before returning to sequential growth the following quarter.
The board authorized a new $20 billion share repurchase program, with Qualcomm already deploying $5.4 billion in the first half of FY26, including $2.8 billion and 19 million shares repurchased in Q2 alone.
A quarterly dividend of $0.89 per share, combined with full-year FY25 capital returns of $12.596 billion, underscores a management team aggressively returning capital to shareholders.
Free cash flow yield stands at 5.21%, return on equity sits at 23.34%, and interest coverage is 18.6x, giving Qualcomm the balance sheet capacity to fund both its data center expansion and its buyback simultaneously.
The most significant risk remains Apple, where any acceleration of an in-house modem timeline could strip away a meaningful portion of premium handset revenue from Qualcomm’s top line.
That overhang has followed the stock for a decade, though non-Apple QCT revenue grew 18% in FY25 and combined automotive plus IoT grew 27% year over year for the full fiscal year, showing real diversification in the income statement.
QCOM shares have risen 100% from their April lows, hitting a 52-week high of $258, with an Investor Day scheduled for June 24 expected to provide further detail on the Data Center and Physical AI roadmap.
