Qualcomm Falls 7% After Q4 EPS Guidance Misses by 12% — Automotive Hit a Record $1.6B

TradingKey - Qualcomm (NASDAQ: QCOM) stock value fell to approximately $151 Thursday following a $155.57 closing price on Wednesday. Shares fell further, to $144.53 after hours, a 7.16% loss, after the Q3 FY2026 report. During Thursday's regular trading, Qualcomm shares hit an intraday low of approximately $147.86, before recovering. Qualcomm reported Q3 FY2026 earnings of $9.95 billion, exceeding expectations of $9.67 billion by 2.84%, as Q3 FY2026 earnings also fell at the upper range of FY2026 Q3 earnings guidance. Though, Qualcomm reported FY2026 Q3 non-GAAP earnings per share of $2.21, missing the estimate of $2.22, and net income fell 25% year over year.

For FY2026 Q4, Qualcomm forecasts earnings per share between $2.05 and $2.25. Qualcomm also forecast FY2026 Q4 revenue between $9.7 and $10.5 billion, falling short of the $2.36 to $2.38 earnings per share range and $10.02 billion revenue estimate. FY2026 Q3 results show record revenues of $1.6 billion in the automotive sector, a year over year increase of 61%, and 28% increase in all other revenue, excluding handsets.

What Q3 Showed - Revenue Beat, Margin Pressure, Apple Decline

Margin pressure continues to hurt profitability for Qualcomm and the overall market is taking the Q3 FY2026 results as a mixed earnings report. Revenues for the quarter of $9.95 billion surpassed the estimate. The automotive and overall results for the quarter also fell at and above the range of the guidance provided by the company in early April. While investors and analysts are viewing this as good management, the results are still disappointing. QCT gross margins also fell below the company's historical margins of 48% to 50%. There was a supply chain hit, and costs increased for wafer fabrication, chip assembly, advanced packaging, and memory.

The Apple decline was the most negative trend. During the earnings call, CEO Cristiano Amon noted that the decline was happening quicker than expected. Qualcomm now has less than 20% of modem chip market share for new iPhones. Revenue from Handset chips decreased 20% year on year to $5.1 billion. Amon claimed that the Handset chip decline was due to rising memory costs in the market. This was a result of the costs for premium smartphones going up, which led to consumers choosing to buy mid-tier smartphones and forgoing a smartphone upgrade. These factors reduced sales of Qualcomm’s Snapdragon chips that are the highest margin chips for the company.

Q4 Guidance Miss and Selloff

The decline in stock price during after-hours trading was primarily due to FY2026 Q4 guidance. Adjusted EPS were guided to be $2.05 to $2.25. This was below analyst expectations of $2.36 to $2.38. Revenue in the guidance was $9.7 billion to $10.5 billion and was expected to be $10.02 billion to $10.07 billion. The $10.1 billion mid-point was just above the expected consensus, but the mid-point EPS of $2.15 was lower than expected by $0.22.

Amon stated that to deal with inflation of costs, Qualcomm was going to raise prices of all products. Amon stated, "Since costs have gone up, prices are going up." The market, however, is worried about the lack of alternatives for customers, instead of choosing Qualcomm parts at inflated prices, they could just continue to use existing pre-inflation components.

Bright Spots - Automotive Record, Non-Handset Growth

While Qualcomm faced difficulties in the handset market, the company’s automotive diversification narrative peaked in Q3. Automotive revenue reached an all-time high of $1.6 billion, a 61% increase year-on-year, building on Q2’s record of $1.3 billion, a 38% increase year-on-year. Management anticipates that automotive revenue will increase significantly given the expansion of the Snapdragon Digital Chassis frameworks for the digital cockpit, ADAS, and connectivity, in multiple future vehicle models. Non-handset QCT revenue increased 28% year-on-year, demonstrating that the business-model transformation is accelerating at significant scale, even though smartphones continue to represent the largest segment of revenue.

The earnings call and Investor Day linked to one another when Qualcomm, only weeks after the earnings call, announced a sharp increase of the fiscal 2029 target for non-handset revenue to $40 billion, over double the target for November 2024.

Additionally, it was announced that Meta Platforms would be the first customer of Qualcomm’s newly developed Dragonfly C1000 central processing units. Management predicted an acceleration in the growth of non-handset revenue during the Q3 call from 24% in fiscal 2026 to over 60% in fiscal 2027. Qualcomm’s revenue from IoT grew 9% to $1.83 billion. Additionally, a new semiconductor agreement was reached with BMW Group during the quarter.

QCOM Technical Setup

After an after-hours drop of 7.16%, QCOM is recovering from post-earnings lows around $143.10. 50-period EMA at $168.40 and 200-period EMA at $184.20 are positioned above price and sloping lower, which helps sustain a bearish structure. After-hours, price levels were below 30, RSI has rebounded to almost 36 from the deep oversold structure.

Qualcomm Price Chart - Source: Tradingview

Breaking the descending trendline and overcoming the $163.90 resistance would be the first positive signals, followed by the 50 EMA at $168.40 and $178.30. The next support is at $137.20 on a breach below $143.10.

Key Levels

• Regular session: Closed at $155.57. After-hours trading at -7.16% $144.53. Thursday trading at ~$147-$155.
• Q3 revenue: $9.95B (est $9.67B; $9.67B; +2.84% beat). At the top of guidance. -4% YoY
• Q3 EPS: Non-GAAP at $2.21 (expected $2.22; -$0.01). GAAP at $1.87. Net income down 25% YoY.
• Q4 guidance: Adj EPS $2.05-$2.25 (below $2.37 est) and revenue $9.7-$10.5B (mixed vs $10.02B est)
• Automotive: Record $1.6B (YoY +61%). FY2029 non-handset target at $40B.
• Price increase: Qualcomm to increase pricing on chips across their product line on September 1.
• Resistance: $163.90 (trendline), $168.40 (50 EMA), $178.30, $188.00
• Support: $143.10 (after-hours low), $137.20, $130.40

Why Did Qualcomm Stock Fall After Beating Revenue Estimates?

Qualcomm revenue for the last quarter was $9.95 billion, beating the consensus by 2.84%, but the stock fell 7.16% for three reasons. First, Q4 adjusted EPS of $2.05 to $2.25 was well below the $2.36 to $2.38 estimate (margin pressure likely before the price increase on September 1). Second, the rate of Apple deceleration is more than what was previously stated and Qualcomm's iPhone modem market share is now below the targeted 20%. Third, QCT gross margins lower than the historic range of 48-50% due to the supply chain and costs across fabrication, assembly, packaging,

Is Qualcomm's September 1 Price Increase a Risk or a Positive?

To explain margin compression, CEO Cristiano Amon announced costs went up and prices must follow. Customer reaction is key to the price increase. Qualcomm's customers are smartphone OEMs. Smartphone OEMs face higher memory costs and are facing consumer resistance against expensive smartphones. 

OEMs could extend their use of cheaper existing chipsets and draw down the inventory instead of purchasing new more expensive chipsets from Qualcomm. 

This would suggest that the Revenue Guidance for Q4 of $9.7 Billion to $10.5 Billion would end up on the lower end instead of the midpoint. How successful the price increase is will be evidenced by the actual results for Q4, which Qualcomm is set to release on October 26, 2026.

Final Thoughts

Qualcomm shares dropped by 7.16% after Q3 earnings announced Revenue of $9.95 Billion. Concerns were exacerbated by Net Income declining 25%, Apple Modem Revenue fell below the 20% target, margins compressed, and Q4 guidance was set below consensus at $2.05 to $2.25 vs $2.36 to $2.38.

Revenue of $1.6 Billion from the Automotive Segment was a 61% yearly increase, and Non-Handset Revenue grew 28% with the FY2029 target raised to $40 Billion. $143.10 is the after-hours low support and $163.90 and the trendline are the resistance levels. RSIs are approaching 36. Pricing across all products was adjusted on September 1 to combat inflation.