Qualcomm stock dropped 10% after weak guidance despite beating Q1 earnings and revenue estimates

Qualcomm stock dropped 10% in after-hours trading on Wednesday, even though the company beat both profit and revenue expectations.

Qualcomm’s outlook for the next quarter sucked though, as the company blamed memory chip shortages for the soft guidance, and it’s clear that markets weren’t buying any excuses.

For the fiscal first quarter of 2026, Qualcomm delivered adjusted earnings per share of $3.50, beating the expected $3.41. Revenue came in at $12.25 billion, slightly ahead of the $12.21 billion estimate.

That’s a 5% jump compared to the same quarter last year. But even with the beat, the stock tanked. The problem was all in the forecast, which painted a weaker picture for the months ahead.

Revenue and profit breakdown show modest year-on-year growth

On a GAAP basis, revenue still clocked in at $12.25 billion, up from $11.67 billion last year. Net income, however, slipped from $3.18 billion to $3.00 billion, showing a 6% decline. GAAP earnings per share also dropped from $2.83 to $2.78, a small dip of 2%.

The company’s operating income came in at $3.37 billion, down from $3.55 billion last year. Research and development spending rose from $2.23 billion to $2.45 billion, and total expenses increased to $8.89 billion. Despite the higher costs, Qualcomm still managed to beat expectations thanks to strong chip sales.

The QCT segment, which handles chip sales, reported $10.61 billion in revenue, up 5% from the year before. Within QCT, handsets brought in $7.82 billion, automotive chips earned $1.10 billion, and IoT revenue hit $1.69 billion. All three categories grew modestly, with automotive up 15%, the highest jump of the bunch.

The licensing segment, QTL, brought in $1.59 billion, up 4% year-on-year. QCT’s earnings before tax rose 2% to $3.30 billion, while QTL’s grew 6% to $1.23 billion.

Weak guidance linked to memory chip supply constraints

The real hit came from the company’s guidance for the next quarter. Qualcomm said it expects revenue between $10.2 billion and $11 billion, which is below the $11.11 billion analysts had predicted. On the earnings side, it projected $2.45 to $2.65 per share, versus the expected $2.89. This is where investors hit the panic button.

The company explained the lower outlook by saying that memory chip supply problems are hurting demand from handset customers. “Our guidance includes the estimated impact of memory supply constraints and related pricing on demand from several handset customers,” the company said in its statement.

Expected QCT revenue is between $8.8 billion and $9.4 billion, and QTL between $1.2 billion and $1.4 billion. GAAP earnings per share are expected to fall between $1.69 and $1.89, with non-GAAP at $2.45 to $2.65. Stock-based compensation is expected to knock off about $0.68, and other items another $0.08.

Balance sheet details, stock buybacks, and dividend payout

As of December 28, 2025, Qualcomm held $7.21 billion in cash, up from $5.52 billion in September.

Marketable securities totaled $4.62 billion, and inventory rose slightly to $6.67 billion. Total assets stood at $53.03 billion, up from $50.14 billion.

Total liabilities climbed to $29.96 billion, with long-term debt unchanged at $14.82 billion. Shareholders’ equity increased to $23.07 billion, from $21.21 billion in the previous quarter.

During the quarter, Qualcomm returned $3.6 billion to shareholders. That includes $949 million in dividends, equal to $0.89 per share, and $2.6 billion in stock buybacks, which covered 15 million shares.

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