- QCOM
-4.42%
Chipmaker Qualcomm (QCOM) reported its third quarter results on Wednesday, meeting <a href="https://aitoday7.com/qualcomm-q3-earnings-top-revenue-expectations-as-smartphone-market-slows/” title=”Qualcomm Q3 earnings top revenue expectations as smartphone market slows”>expectations on earnings per share, while topping revenue projections.
For the third quarter, Qualcomm saw earnings per share (EPS) of $2.21 on revenue of $9.9 billion. Analysts were anticipating EPS of $2.21 and revenue of $9.6 billion.
“Despite a challenging memory and supply environment, our third quarter results reflect solid execution of our growth strategy, with quarterly revenues at the high end of guidance,” CEO Cristiano Amon said in a statement.
“In the near term, we expect year-over-year growth in non-handset revenues, including Data Center, to accelerate from 24% in fiscal 2026 to greater than 60% in fiscal 2027 — a significant inflection point in the execution of our growth strategy.”
Shares in the technology stalwart sank almost 6% in premarket trading on Thursday as investors assessed the results.
Qualcomm is in the midst of a broad diversification effort as it works to reduce its dependence on its handset business, which has slowed over the years.
That’s become increasingly important as smartphone makers increase prices to offset the rising cost of memory and storage chips, impacting shipments.
“The smartphone industry is not great,” Bernstein analyst Stacy Rasgon told Yahoo Finance’s Julie Hyman on Wednesday.
“Memory prices are going up, and AI is sort of sucking up a lot of the supply. And so it’s just not leaving a lot for the smartphone players. And we’re seeing unit growth has gone negative,” he added.
According to CounterPoint Research, Q2 global smartphone shipments fell 11% year over year, marking the industry’s worst second quarter in 13 years.
Qualcomm’s CDMA Technologies segment revenue, which includes smartphone, internet of things, and automotive sales, came in at $8.5 billion versus expectations of $8.2 billion.
Handset sales in particular topped $5.1 billion compared to an anticipated $4.9 billion. Automotive-related sales hit $1.5 billion; Wall Street was looking for $1.4 billion in the quarter.
Part of Qualcomm’s plan to expand its total addressable market includes a sharp turn into the AI data center space.
During its investor day in June, the company showed off its line of data center offerings and servers, including an AI accelerator, CPU, memory, and rackscale server.
CFO Akash Palkhiwala told Yahoo Finance following the event that the company expects its data center products to generate $5 billion in revenue in fiscal 2027. It also doubled its non-handset sales projections for its fiscal 2029 to $40 billion.
