Qualcomm (QCOM) Q3 Revenue Jumps 10%

Key Points

• Revenue reached $10.37 billion, beating expectations for Q3 FY2025 on both non-GAAP EPS and GAAP revenue and growing 10% year over year.

• Non-GAAP EPS was $2.77, surpassing estimates by 2.2 % and up 19 % year over year.

• Automotive and IoT segment revenues rose 21% and 24%, respectively (GAAP).

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Qualcomm (NASDAQ:QCOM), a leading company in wireless technology and semiconductor solutions, released its fiscal third quarter earnings on July 30, 2025. The main headline was a 10% rise in revenue to $10.4 billion (GAAP), topping analyst GAAP revenue estimates of $10.34 billion. Non-GAAP earnings per share (EPS) were $2.77, exceeding forecasts by 2.2 %. The company saw particularly strong gains in its automotive and IoT (Internet of Things) segments. Overall, the quarter provided further validation of the company’s growth strategy while keeping an eye on risk factors in key regions.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q2 2025 earnings report.

Company Overview and Key Business Focus

Qualcomm is best known for supplying advanced wireless chips and processors. Its products are found in smartphones, cars, industrial equipment, and many connected devices around the world. The company also generates meaningful revenue through licensing its patented technology to other companies integrating wireless connectivity into their products.

The company’s core focus remains building on its leadership in 5G networks and wireless connectivity, ensuring it remains at the heart of next-generation smartphones. But leadership has been actively pushing to diversify, expanding into fast-growing areas such as automotive electronics and IoT. Its success in these areas increasingly depends on innovation in advanced semiconductors, building a robust intellectual property portfolio, effective capital allocation, and staying ahead in a very competitive semiconductor landscape.

Quarterly Highlights and Segment Performance

The third quarter saw broad revenue growth, with the QCT (Qualcomm CDMA Technologies) segment, which includes mobile chips, automotive chips, and IoT chips, posted revenue of $8,993 million (GAAP), up 11% versus Q3 fiscal 2024. Automotive chips posted their highest quarterly GAAP revenue to date, at $984 million, marking a 21% increase year over year, driven by a surge in design wins and growing demand for digital vehicle platforms. IoT chips, which power industrial and consumer devices, saw revenue climb 24%.

Handset chips remained the largest business within QCT, but their revenue grew 7% year over year. However, the automotive and IoT segments combined for 23% year-over-year growth, showing the impact of the company’s ongoing diversification away from dependence on mobile handsets. The licensing segment (QTL), which includes intellectual property and patent licensing revenue, delivered $1.32 billion in revenue, a 4% increase year over year. This area continues to supply high margins, but growth remains moderate compared to the chip business.

Profitability improved as well, with Non-GAAP net income reaching $3.0 billion, reflecting higher margins in the QCT segment. This was supported by a 3 percentage point increase in QCT’s earnings-before-tax margin, which rose from 27% to 30% year over year. Management credits new product launches, such as the flagship Snapdragon X85 5G modem and platform, for helping maintain the company's technological edge in both mobile and emerging device markets.

The quarter also featured several notable developments affecting future direction. Qualcomm announced a planned $2.4 billion acquisition of Alphawave IP Group, aimed at strengthening its position in data center and connectivity chips beyond the core mobile market. Additional investments into industrial IoT were highlighted by the completion of deals for Edge Impulse and FocusAI, adding AI development and computer vision technology to its portfolio.

The company returned $3.8 billion to shareholders through dividends and share buybacks. The quarterly dividend remained steady and was not raised, but continued regular payments align with management’s commitment to return 100 % of free cash flow to shareholders in fiscal 2025.

Looking Forward: Guidance and Investor Watchpoints

For the fiscal fourth quarter, management expects GAAP revenue to be between $10.3 billion and $11.1 billion, and projects Non-GAAP diluted EPS in the range of $2.75 to $2.95. QCT revenue is forecast at $9.0 billion to $9.6 billion with QTL revenue expected between $1.25 billion and $1.45 billion. This guidance assumes continued strength in automotive and IoT, offsetting expected moderation in handset revenue due to normal seasonal shifts and a planned reduction in supply to a major customer’s new product cycle.

Investors should continue to monitor Qualcomm’s progress in diversifying its product mix and customer base, especially amid risks posed by U.S.–China trade dynamics. Leadership noted that a significant share of business remains in China, where national security policies and shifting regulations can affect both chip sales and licensing. Competitive pressures, particularly from MediaTek and Samsung in smartphones and from new entrants in automotive and IoT, are likely to persist.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends Qualcomm. The Motley Fool has a disclosure policy.