Solid Q4 results and upbeat forecast despite GAAP setback
Qualcomm (QCOM) delivered stronger-than-expected fourth-quarter earnings on Wednesday, reporting adjusted earnings per share of $3.00 on revenue of $11.27 billion. Analysts surveyed by Bloomberg had forecast $2.88 EPS on $10.77 billion in revenue.
The company also provided better-than-anticipated guidance, projecting revenue between $11.8 billion and $12.6 billion for the next quarter, ahead of the expected $11.59 billion.
However, Qualcomm also disclosed a one-time, non-cash tax-related charge of $5.7 billion linked to former President Trump’s One Big Beautiful Bill Act. While excluded from its non-GAAP figures, the charge impacted GAAP earnings. The company stated that this adjustment will reduce future cash tax obligations.
Following the report, Qualcomm stock dropped over 3% in after-hours trading.
Smartphone segment remains dominant
Qualcomm’s business is split into two main segments: QCT, which includes chips for smartphones, IoT devices, and automotive applications; and QTL, which handles licensing revenue.
QCT brought in $9.8 billion in revenue, exceeding expectations of $9.3 billion. QTL revenue came in at $1.4 billion, matching analyst forecasts.
Despite smartphone market saturation, Qualcomm still derives most of its revenue from smartphone chip sales and related licensing agreements. However, the company faces long-term pressure as Apple continues to reduce its reliance on Qualcomm chips in favor of its own silicon, already present in devices like the iPhone 16e and iPhone Air.
AI and data centers mark next growth frontier
Qualcomm is aggressively expanding into the AI and data center markets to diversify its revenue. Last week, the company announced its AI200 and AI250 data center chips, along with rack-scale server infrastructure. The AI200 will launch in 2026, followed by the AI250 in 2027. A third chip is planned for 2028.
Rack-scale servers enable pooling of computing power across multiple chips, a move that pits Qualcomm directly against industry leaders Nvidia and AMD. Nvidia already dominates the sector, and AMD recently introduced its Helios rack-scale system.
The announcement led to an 11% surge in Qualcomm stock. However, on a year-over-year basis, Qualcomm shares are up just 9%, far behind Nvidia (+44%), AMD (+82%), and Intel (+64%). The S&P 500 is up 18% over the same period.
PC chips complete Qualcomm’s diversification strategy
Qualcomm also continues to expand in the PC market with its Snapdragon processors for Windows laptops, competing with Intel and AMD. These chips aim to bring mobile-level efficiency and AI integration to traditional computing devices.
Entering the data center and PC sectors gives Qualcomm access to high-growth markets, but execution will be critical. The firm is up against established players with significant market share and deep capital reserves. Still, Qualcomm’s strategy signals a long-term pivot away from smartphone dependency toward broader AI-driven innovation.
