Qualcomm (NASDAQ: QCOM) fell nearly 8% in after-hours trading after the chipmaker reported fiscal third-quarter results that narrowly missed Wall Street expectations despite beating on revenue.
The company posted non-GAAP earnings of $2.21 per share for the quarter, a decline of 20% compared to the same period a year earlier, marking a sharp year-over-year deterioration.
Total revenues fell 4% to $9.95 billion, with higher input costs and persistent handset weakness combining to pressure profitability across the business.
QCT revenues, which represent Qualcomm’s core chipset division, declined 5% to $8.50 billion, reflecting a challenging environment for semiconductor demand amid ongoing supply constraints.
Handset revenues were particularly weak, plunging 20% to $5.09 billion as major original equipment manufacturers reduced chipset purchases and worked through elevated inventory levels.
Memory supply constraints and higher memory prices added further pressure, contributing to the broad pullback in chipset purchases from handset customers during the quarter.
Qualcomm also disclosed that its modem chip share in the next iPhone launch is now expected to be materially lower than its prior estimate of 20%, accelerating the decline in Apple-related revenue beginning in the fourth fiscal quarter.
The company issued a weaker-than-expected earnings outlook for the fourth quarter, citing continued memory supply constraints and elevated semiconductor input costs as key headwinds to near-term profitability.
On a more constructive note, management indicated that China OEM handset revenues reached a bottom during the quarter and expects double-digit sequential growth in the fourth quarter as channel inventory drawdowns ease.
That recovery signal from China represents one of the few areas of genuine optimism in an otherwise subdued earnings report for the world’s largest mobile chipmaker.
Earnings estimates for Qualcomm have been revised lower following the results, with fiscal 2026 estimates declining 0.8% to $10.69 per share and fiscal 2027 estimates falling 0.4% to $10.84 per share over the past seven days.
The combination of Apple share losses, handset weakness, and a cautious near-term outlook has raised questions among investors about the pace and durability of any recovery in Qualcomm’s core business through the remainder of the fiscal year.
