The SpaceX contract didn't help Qualcomm: Investors were disappointed by the earnings forecast

Qualcomm, the largest manufacturer of smartphone processors, disappointed investors with its cautious earnings forecast for the current quarter. The weak outlook reflects the difficulties the company is facing due to rising component costs, Bloomberg notes. The chipmaker’s stock plummeted 8% in after-hours trading on November 4. During regular trading hours, however, the stock rose following news of a multi-year contract with SpaceX to supply equipment for its Starlink Mobile network.

Qualcomm expects earnings per share for the current quarter (ending in December) to range from $2.15 to $2.35. The midpoint of this range—$2.25—fell short of the consensus estimate from analysts surveyed by Bloomberg: the market had forecast $2.32. Qualcomm cited “across-the-board increases” in component and manufacturing costs. Like many other chipmakers, the company is facing rising costs due to component shortages in its own supply chain and a shortage of memory chips caused by a sharp increase in demand for data center equipment, Bloomberg reports.

The weak earnings forecast overshadowed Qualcomm’s optimistic expectations for quarterly revenue, which improved thanks to the company’s expansion into new markets, the agency notes. Qualcomm expects sales to range from $10.4 billion to $11.2 billion, while analysts had forecast an average of $10.55 billion.

Following the release of its earnings report, Qualcomm’s stock fell 7% in after-hours trading on November 4. During regular trading hours, however, the stock rose 5.3% following the announcement that the company had signed a contract with SpaceX to supply equipment for Starlink Mobile ground stations.

The smartphone market continues to weigh on Qualcomm’s financial results. Revenue for this division in the fourth quarter of fiscal year 2026 plummeted 26% to $5.14 billion, while analysts had forecast $5.25 billion. Revenue from the sale of internet-connected devices rose 4% to $1.89 billion, while revenue from automotive electronics increased 89% to $2 billion. Both figures exceeded analysts’ expectations.

Growing demand from automakers and data center equipment manufacturers is helping Qualcomm offset the slowdown in the smartphone market. According to Qualcomm CEO Cristiano Amon, the company’s revenue from data center chips totaled $650 million last quarter—primarily driven by solutions tailored to customer needs and data transmission technologies. During a conference call following the earnings report, he also stated that Qualcomm expects to generate $5 billion in revenue from this segment in fiscal year 2027.

"We don't have a problem with demand; the problem is on the supply side," CNBC quotes Amon as saying. "If I could supply more products, the results would probably be better."

Phone manufacturers, which remain Qualcomm's largest customers, are cutting back on device production as they struggle to cope with the rapid rise in prices for memory chips and other components.

Total revenue for the quarter ended September 27 fell 8% to $10.3 billion. Earnings per share were $2.17. Both figures slightly exceeded analysts’ expectations, which were $10.1 billion and $2.16, respectively, according to Bloomberg.

Qualcomm aims to expand its presence in segments such as personal computers, automobiles, networking equipment, and, more recently, data centers. Qualcomm has already announced that it has secured major clients for its technologies used in AI-enabled computers. The company claims that its experience in developing energy-efficient devices enables it to offer unique solutions.

However, investors remain cautious, Bloomberg notes: Concerns that revenue from new business lines will start coming in too late to offset the decline in the mobile device segment—which remains Qualcomm’s core business—are weighing on the stock price.

Wall Street, on the whole, has a neutral view on the chipmaker’s stock: 22 out of 39 analysts recommend holding Qualcomm shares in their portfolios, according to MarketWatch. Another 13 analysts recommend buying, and four recommend selling. The average target price for the stock is $198.6, which is more than 14% higher than the closing price on November 4.

This article was AI-translated and verified by a human editor