QCOM reported $9.9 billion in third-quarter revenue on Wednesday, topping Wall Street's $9.6 billion estimate even as the smartphone market weakened. The company matched EPS expectations at $2.21 a share, giving investors a cleaner read on where the business is still outperforming and where handset pressure is building.
Cristiano Amon on Q3
“Despite a challenging memory and supply environment, our third quarter results reflect solid execution of our growth strategy, with quarterly revenues at the high end of guidance,” Cristiano Amon said in a statement. He also pointed to the company’s push beyond handsets, saying non-handset revenues are expected to accelerate from 24% growth in fiscal 2026 to greater than 60% in fiscal 2027.
$8.5 billion of revenue came from CDMA Technologies, above the $8.2 billion that Wall Street expected. The core chip business still carried the quarter, and the gap to estimates showed Qualcomm did more than simply clear a low bar. It posted enough strength in its largest segment to offset weakness elsewhere in the smartphone cycle.
Handset sales top estimates
More than $5.1 billion in handset sales also beat the $4.9 billion estimate, while automotive-related sales reached $1.5 billion versus $1.4 billion expected. Those numbers matter because they show Qualcomm is still getting lift from categories outside the handset business even as the smartphone market loses momentum.
11% was the year-over-year drop in global smartphone shipments in the second quarter, according to CounterPoint Research, and it was the industry's worst second quarter in 13 years. Stacy Rasgon said, “The smartphone industry is not great,” and added, “Memory prices are going up, and AI is sort of sucking up a lot of the supply. And so it's just not leaving a lot for the smartphone players. And we're seeing unit growth has gone negative,” a blunt description of the squeeze facing Qualcomm's customer base.
QCOM's non-handset push
$5 billion is what Akash Palkhiwala said Qualcomm expects data center products to generate in fiscal 2027, after the company showed off those offerings and servers at its investor day in June. Qualcomm has also doubled its non-handset sales projections for fiscal 2029 to $40 billion, which makes the next phase of growth less dependent on phone cycles than this quarter's numbers still are.
How much faster the non-handset mix can close the gap with handset revenue is the question left by Wednesday's report. For now, QCOM has shown it can beat estimates while the smartphone market weakens, but the pace of that shift will determine whether the business leans less on phones quickly enough to matter.
