Qualcomm stock rebounds as data-center growth offsets handset pressure

Qualcomm reported fiscal fourth-quarter results after the US market close on Wednesday, November 4, with adjusted revenue of 10.44 billion US dollars and adjusted earnings of 2.17 US dollars per share. The results exceeded the cited expectations, but the outlook kept pressure on the smartphone business in focus, according to CNBC.

Qualcomm stock traded at 146.36 euros on Lang & Schwarz at 16:30 CET on Friday, November 6, 9.76 percent above the 133.34 euros cited in our November 5 report at 17:02 CET. Separately, the quote stood 7.60 percent above the Xetra close of Thursday, November 5, at 136.02 euros.

Handset weakness meets cost inflation

Handset chip revenue fell 26 percent year over year to 5.14 billion US dollars in the quarter. Management linked the pressure to industry-wide memory costs, which are forcing device makers to raise prices and weighing on demand. Qualcomm expects handset revenue to decline by a mid-single-digit percentage sequentially in the December quarter.

For fiscal first-quarter 2027, Qualcomm guided to revenue of 10.4 billion to 11.2 billion US dollars and adjusted earnings of 2.15 to 2.35 US dollars per share. The revenue range exceeded the cited analyst estimate, while the earnings midpoint fell short, leaving gross-margin execution as a central issue.

Automotive and data centers broaden growth

Automotive revenue rose 89 percent year over year to 1.99 billion US dollars, while IoT revenue increased 4 percent to 1.88 billion US dollars. Data-center revenue reached 650 million US dollars in the quarter, mainly from customization and connectivity work.

Management reiterated a 5 billion US dollar data-center revenue target for fiscal 2027 and expects data-center revenue above 650 million US dollars in the December quarter. It also expects non-handset revenue across automotive, IoT and data centers to grow more than 60 percent in fiscal 2027 and exceed half of QCT revenue.

Qualcomm is implementing price increases to reflect higher wafer, packaging, testing, memory and other semiconductor costs. Management expects the full benefit for QCT gross margins in the second half of fiscal 2027, leaving the next two quarters as an important test of the diversification strategy.

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