Qualcomm (NASDAQ: QCOM) shares fell around 9% in U.S. premarket trading on Thursday, November 5, 2026, after the chipmaker reported a sharp decline in handset-chip revenue. Although Qualcomm exceeded analysts’ expectations for adjusted quarterly revenue and earnings, investors focused on weaker smartphone-related chip sales and pressure from rising semiconductor production costs.
Qualcomm released its fiscal fourth-quarter results on November 4, covering the period ending September 27, 2026. Handset-chip revenue declined 26% from a year earlier, while the company highlighted rising costs for semiconductor manufacturing, memory, packaging, and other materials. These pressures affected investor confidence despite stronger automotive revenue and Qualcomm’s plans to expand its AI data center business.
In its fiscal 2026 fourth-quarter earnings release, Qualcomm reported GAAP revenue of approximately $10.32 billion, down 8% from $11.27 billion during the same period last year. On an adjusted basis, revenue reached $10.44 billion, while adjusted earnings came in at $2.17 per share. Both figures were slightly higher than analysts had expected.
The biggest weakness was Qualcomm’s handset-chip business, where fourth-quarter revenue fell 26% to approximately $5.14 billion, compared with $6.96 billion a year earlier. This decline measures Qualcomm’s chip revenue rather than the total number of smartphones sold worldwide. Higher memory prices may also increase the cost of producing smartphones, creating additional challenges for manufacturers and their component suppliers.
Apple’s gradual shift toward its own modem technology presents another challenge for Qualcomm’s smartphone-chip business. For example, Apple’s C1X cellular modem in the iPhone 17e shows how Apple is replacing some third-party connectivity chips with its own technology. However, Qualcomm has also renewed long-term patent licensing agreements with Apple, meaning reduced modem-chip orders do not necessarily end the companies’ broader business relationship.
Despite these difficulties, Qualcomm reported encouraging growth in other business areas. Automotive chip revenue increased 89% to approximately $1.99 billion, supported by growing demand for advanced vehicle technology. Revenue from Internet of Things (IoT) products also increased 4% to about $1.89 billion. One example of Qualcomm’s role in connected vehicles is the Snapdragon-powered digital system in the AUDI E5 Sportback, which uses the company’s automotive processing technology for its in-car features.
Artificial intelligence remains an important part of Qualcomm’s long-term expansion strategy. The company is developing computing and connectivity technologies for AI data centers and has reiterated its target of approximately $5 billion in data center revenue for fiscal 2027. Qualcomm’s long-term data center strategy also outlines a goal of generating more than $15 billion in annual data center revenue by fiscal 2029. These figures represent future targets rather than revenue the company has already earned.
Qualcomm also expects revenue from businesses outside handsets to grow by more than 60% during fiscal 2027. Its custom AI chip collaboration with Amazon highlights how the company is expanding into specialized processors and high-speed connectivity solutions for large AI data centers. Such partnerships may support Qualcomm’s efforts to reduce its dependence on smartphone chips, although the projected revenue growth will depend on future customer demand and successful product deployments.
In its November 4 SpaceX announcement, Qualcomm confirmed that SpaceX had selected its Dragonwing cellular infrastructure platforms and software for the planned Starlink Mobile terrestrial 5G network in the United States. SpaceX plans to begin deploying the ground-based infrastructure in 2027, but the companies have not announced a confirmed nationwide consumer launch date or the financial value of the agreement. The planned network and its technology are covered in more detail in TechBonafide’s report on Qualcomm’s Starlink Mobile 5G agreement.
For the first quarter of fiscal 2027, Qualcomm forecast revenue between $10.4 billion and $11.2 billion, with adjusted diluted earnings of $2.15 to $2.35 per share. The company also warned that rising semiconductor input costs could pressure its chip-business profit margins. Qualcomm expects its pricing adjustments to provide their full benefit to those margins during the second half of fiscal 2027, although actual results may differ from its forecasts.
Qualcomm’s main challenge is to stabilize its handset-chip business while expanding into automotive technology, connected devices, and AI data centers. The reported premarket share decline reflects investors’ initial reaction rather than a confirmed full-day closing loss. Whether Qualcomm’s newer businesses can offset smartphone-related weakness will depend on future customer orders, revenue growth, and profit margins.
