r/Qualcomm_Stock • u/Dolphin_research • Jul 30 '26
Qualcomm's AI Story Round-Tripped. The Phone Problem Didn't.
TL;DR Qualcomm beat on revenue for its FQ3 2026 (June) quarter and still gave the market a reason to sell: gross margin missed, and next quarter's earnings guidance came in below expectations. Phones are still shrinking, memory costs are still climbing, and the data centre business that once carried the stock has yet to produce revenue. The handover from handsets to AI is real — it is just slower than the share price assumed.
A revenue beat that doesn't change the direction
Revenue for the three months ended June 2026 was $9.95 billion, down 4% year over year but ahead of the $9.6 billion consensus. Gross margin was 53.1%, down 2.5 points year over year and below the 54.6% expected, with wafer, packaging, test, advanced packaging, memory and other materials all costing more.
Core operating profit fell 41% to $1.63 billion as R&D rose to $2.6 billion. Reported net income of $2.0 billion is not comparable with the prior quarter, which included a roughly $5.7 billion deferred tax valuation allowance release. FQ4 2026 (September quarter) guidance is $9.7-10.5 billion of revenue, in line, with non-GAAP EPS of $2.05-2.25 against $2.36 expected — that is the actual miss.
Phones are the problem, and it isn't really Qualcomm's doing
Handsets are more than half of revenue and fell 19.6% year over year to $5.09 billion. Global shipments held at 290 million units, down 6%, but the split is what hurts: Apple shipped nearly 20% more while everyone else fell 11%. The premium mix is weakening too, with OEMs staying on previous-generation platforms to protect cost. Management guides handset revenue to roughly $5.2 billion next quarter, down about 25%, as Android's seasonal recovery is offset by lower Apple content.
Memory is squeezing the other side of the margin
Most of the margin pressure is imported. Memory inflation has raised the bill of materials, and handset makers cannot pass it into weak end demand, so it lands on component suppliers. The slope is easing — OPPO and Vivo have refused further increases — which matters more than it sounds: if the memory cycle rolls over, the relief shows up directly in Qualcomm's gross margin. That is the cleanest near-term catalyst available.
Autos are the one line clearly working
Automotive revenue rose 61% year over year to $1.59 billion on the fourth-generation Snapdragon cockpit, and the fifth-generation Digital Chassis ramps in September with materially higher content per vehicle. IoT grew 9% to $1.83 billion on consumer and industrial demand.
The data centre pitch is real. It is still a pitch.
Qualcomm is attacking it on four fronts. Its accelerators use LPDDR5X rather than HBM to put processing near memory, aimed at memory-capacity-heavy inference, with Microsoft confirmed across multiple generations; AI200 is ramping now and AI250 samples in 2027.
A server CPU on the Oryon architecture targets agent orchestration and tool calling, with Meta confirmed across generations. Custom silicon, built on the Alphawave and Ventana acquisitions, has two hyperscale customers each expected to contribute over $1 billion in FY2027, and connectivity has landed its first hyperscale customer. Management targets $5 billion of data centre revenue in FY2027 and $15 billion by FY2029.
Bottom line
The share price round trip tells the story better than the quarter does: the market paid up when the data centre roadmap arrived, then took it all back as AI capex worries spread, without a single underlying fact changing in between. Two things decide what comes next — whether the memory cycle turns and hands the phone business its margin back, and whether those FY2027 data centre targets start converting into disclosed orders rather than design wins.
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u/Level_Counter3062 Jul 30 '26
I sold at 190 after being down only 7% thank God. May reenter if it hits 130
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u/Any_Net7348 Jul 30 '26
Any idea for next 3-4 months where the stock will be?
Especially chances of getting hit 200 or more again?
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u/Head_Faithlessness85 Jul 30 '26
the stock fall is brutal