Qualcomm shares slide as smartphone weakness clouds growth push

Qualcomm shares declined as smartphone weakness cast doubt on the company's growth plans. The chip maker missed Wall Street estimates for fourth-quarter smartphone chip sales, citing sluggish demand and falling Apple-related revenue. While revenue from Qualcomm's data-center segment surpassed expectations, investors were more concerned about the sharp decline in the company's core business.

Global smartphone shipments plummeted 20% in the September quarter to a 14-year low, driven by rising memory chip costs and high demand for AI data centers. Revenue from Qualcomm's handset unit, which manufactures smartphone chips, dropped 26% to $5.14 billion in the fourth quarter, pulling down the chip segment's revenue by 8% to $9.02 billion.

Analysts had anticipated handset revenue of $5.25 billion. Qualcomm CEO Cristiano Amon stated that Android handset sales had hit a bottom and were starting to rise again. He emphasized that the company had anticipated the memory challenge and prepared for it. Amon also mentioned that the first-quarter fiscal 2027 forecast, released on Wednesday, excludes any sales from Apple, while Qualcomm has secured deals with other customers outside the smartphone industry.

The company expects a 70% year-over-year increase in design wins in fiscal 2027, with Apple removed from the equation. Qualcomm foresees non-handset revenue replacing Apple entirely, with a 60% year-over-year growth in non-handset business leading up to fiscal 2027.