Qualcomm reports Q4 revenue down 8% YoY to $10.3B, vs. $10.1B est., and handsets revenue down 26% to $5.14B, vs. $5.25B est.; QCOM drops 5%+ after hours

Product pricing rises are set to boost chip-segment gross margins in the second half of fiscal 2027.

Qualcomm reported fiscal fourth-quarter revenue of $10.3 billion, an 8% year-over-year decrease, falling slightly short of analyst estimates of $10.1 billion. Handset revenue specifically saw a significant 26% drop to $5.14 billion, missing projections of $5.25 billion. However, the company's push into new markets showed promise, with automotive revenue surging 89% to a record $1.99 billion and internet-of-things revenue rising 4% to $1.89 billion, both exceeding expectations. For the current quarter, Qualcomm forecast revenue between $10.4 billion and $11.2 billion, a range that includes its data center business and surpassed the $10.55 billion anticipated by analysts. Despite a projected non-GAAP earnings per share outlook that fell below analyst expectations, Qualcomm's stock declined around 5% in after-hours trading. The company also announced a long-term patent license renewal with Apple, Huawei, and Transsion, and a multi-generational product collaboration with Amazon for AI data centers.

Qualcomm's diversification strategy is yielding notable growth in automotive and IoT sectors, partially offsetting the steep decline in its core handset business. The company's ability to secure long-term agreements with major players like Apple and Huawei, coupled with new collaborations for AI data centers with Amazon, indicates a strategic pivot towards higher-growth, future-oriented markets. This shift is crucial for Qualcomm as it navigates rising input costs across the semiconductor supply chain, prompting price adjustments to maintain profitability.

The projected substantial growth in non-handset revenue, particularly in data centers, automotive, and IoT, signals a significant transformation for Qualcomm beyond its traditional mobile dominance. By setting ambitious revenue targets for fiscal 2027 and 2029 in these new segments, the company is positioning itself as a key enabler of AI infrastructure and advanced computing. Investors will be watching closely to see if Qualcomm can successfully execute this transition and deliver on its ambitious forecasts amidst industry-wide cost pressures.