Qualcomm Q4 Revenue Falls as Automotive Hits Record, Data Center Ramp Takes Shape

Qualcomm Incorporated (NASDAQ: QCOM) reported lower fourth-quarter fiscal 2026 revenue and earnings as a sharp decline in handset sales outweighed strong growth in automotive and modest gains in the Internet of Things business. The company nevertheless posted record automotive revenue and set out a significant data-center revenue ramp for fiscal 2027.

For the quarter ended in fiscal 2026, non-GAAP revenue fell 7% year over year to $10.44 billion. Non-GAAP earnings before taxes declined 30% to $2.67 billion, while non-GAAP diluted earnings per share dropped 28% to $2.17. GAAP diluted EPS was $1.17.

The results were within Qualcomm’s prior guidance ranges. Revenue was near the upper end of its $9.7 billion to $10.5 billion outlook, while non-GAAP EPS was within the projected range of $2.05 to $2.25.

Automotive growth offsets part of handset decline

Revenue at Qualcomm’s QCT semiconductor business decreased 8% to $9.02 billion. QCT earnings before taxes fell 26% to $2.14 billion, and the segment’s EBT margin narrowed by five percentage points to 24%.

Handset revenue, still QCT’s largest revenue stream, declined 26% to $5.14 billion. In contrast, automotive revenue surged 89% to a record $1.99 billion, marking Qualcomm’s first quarter at roughly the $2 billion level for that business. IoT revenue increased 4% to $1.89 billion. Combined automotive and IoT revenue reached about $3.9 billion.

The QTL licensing segment generated $1.30 billion in revenue, down 7%, while EBT declined 10% to $918 million. QTL’s EBT margin was 70%, compared with 72% a year earlier.

For the full fiscal year, Qualcomm’s non-GAAP revenue decreased 2% to $43.24 billion, non-GAAP EBT fell 16% to $12.98 billion and non-GAAP EPS declined 12% to $10.54. QCT handset revenue fell 13% to $24.07 billion, while automotive revenue rose 52% to $6.00 billion and IoT revenue increased 8% to $7.13 billion.

Fiscal 2026 operating cash flow totaled $11.15 billion, and non-GAAP free cash flow was $8.65 billion after $2.49 billion of capital expenditures. Qualcomm returned $11.67 billion to stockholders during the year through $7.82 billion of share repurchases and $3.85 billion of dividends. In the fourth quarter, it returned $2 billion, split evenly between repurchases and dividends.

Data center becomes a QCT revenue stream

Qualcomm will begin reporting data center as a separate QCT revenue stream in fiscal 2027, alongside handsets, automotive and IoT. Data center operations were included in nonreportable segments during fiscal 2026.

The company expects more than $650 million of data-center revenue in the first quarter of fiscal 2027, followed by sequential increases during the year. It expects to exit fiscal 2027 at a $7 billion annualized revenue run rate and said it remains on track for its previously presented targets of $5 billion in fiscal 2027 and more than $15 billion in fiscal 2029.

Qualcomm identified multi-generation data-center design wins covering connectivity, custom silicon and AI accelerators, and CPUs. Its collaboration with Amazon includes customized silicon for AI inference and optical connectivity products. The arrangement includes warrants covering up to $60 billion of potential Amazon purchases over 10 years, with 15% vested immediately based on initial purchase commitments. Qualcomm said production with Amazon has begun, with revenue starting in the December quarter.

Investment in AI accelerator and CPU roadmaps ahead of the expected revenue ramp will affect reported QCT profitability. Qualcomm said the addition of data center to QCT reduces its first-quarter fiscal 2027 QCT EBT margin guidance by three percentage points, but does not affect total-company guidance or its long-term QCT EBT margin target of 30%.

Fiscal 2027 first-quarter outlook

For the first quarter of fiscal 2027, Qualcomm forecast revenue of $10.4 billion to $11.2 billion and non-GAAP diluted EPS of $2.15 to $2.35. GAAP diluted EPS is expected to range from $1.03 to $1.23.

QCT revenue is projected at $9.0 billion to $9.6 billion, with an EBT margin of 20% to 22%. QTL revenue is expected to be $1.3 billion to $1.5 billion, with an EBT margin between 72% and 76%. Non-GAAP operating expenses are expected to be approximately $2.8 billion.

The company also renewed long-term licensing agreements with Apple, Huawei and Transsion, completing what it described as its 5G-era renewal cycle. Qualcomm said the agreements do not change QTL’s revenue run rate. Its next licensing renewal cycle is expected to run from fiscal 2030 through fiscal 2033.

Higher input costs remain a margin risk

Qualcomm said the semiconductor industry is facing broad-based cost increases across wafer fabrication, assembly, testing, advanced packaging, memory and other materials. The company is implementing product price increases in response, but expects the full benefit of those actions to reach QCT gross margins only in the second half of fiscal 2027.

Its outlook already includes the estimated effect of higher input costs. Other identified uncertainties include dependence on a limited number of handset customers and third-party suppliers, customer vertical integration, exposure to China and U.S.-China tensions, expansion beyond handsets, competition, licensing renewals, intellectual-property disputes and litigation, including its dispute with Arm.