Qualcomm Stock Tumbles on Handset Weakness Amid Diversification Efforts
Qualcomm's stock has plummeted by 30.6% over the past three months, sparking debate about whether the company's handset weakness and short-term margin pressure outweigh its growth in newer businesses.
The company's diversification into automotive, Internet of Things, and data center programs is broadening its revenue mix, but it remains to be seen if this can offset mobile pressures quickly enough to make the pullback more attractive.
Qualcomm's CDMA Technologies (QCT) handset revenues fell 20% year over year to $5.09 billion in the fiscal third quarter of 2026 due to original equipment manufacturers reducing chipset purchases and working down inventory amid memory supply constraints and higher memory prices.
The company expects its QCT Android handset revenues to decline about 20%, with an annual earnings impact exceeding $1.50 per share, while Apple's introduction of its first internally designed cellular modem in the iPhone 16e is expected to reduce Qualcomm's share of the upcoming iPhone launch to be materially below its prior 20% assumption.
However, Qualcomm's auto ramp offers a counterweight, with QCT automotive revenues jumping 61% year over year to a record $1.59 billion in the latest quarter, and the company raised its fiscal 2026 exit outlook for annualized automotive sales to about $7 billion.
The data center push also adds upside and margin risk, with two custom silicon engagements with global-scale hyperscalers expected to begin generating revenues in the December 2026 quarter, but these early ramps carry a profitability trade-off.