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Qualcomm Prepares for Q3 Earnings Amid Smartphone Slowdown and Data-Center Expansion
Qualcomm Inc. (NASDAQ: QCOM) is set to release its third‑quarter results on Wednesday, offering investors a closer look at how a global memory shortage is squeezing smartphone sales and how the chipmaker’s new data‑center business is evolving.
Analysts expect the company to report earnings per share of $2.21 on revenue of $9.6 billion for the quarter, down from $2.77 and $10.3 billion in the same period last year. The decline mirrors a broader slowdown in the handset market, where consumers are keeping devices longer and manufacturers are raising prices to offset higher memory and storage costs.
The memory shortage, driven by the reallocation of manufacturing capacity to AI data‑center products, has pushed DRAM and NAND prices upward. A Bloomberg‑reported analyst, Stacy Rasgon, told Yahoo Finance that the shortage is “sucking up a lot of the supply” and that unit growth in the smartphone sector has turned negative.
To reduce its dependence on handset revenue, Qualcomm has been expanding into the AI‑driven data‑center segment. At its investor day in June, the company showcased a line of servers that combine an AI accelerator, a central processing unit, memory, and rack‑scale architecture. CFO Akash Palkhiwala told Yahoo Finance that the data‑center portfolio is projected to generate $5 billion in revenue in fiscal 2027 and that the company has doubled its non‑handset sales target for fiscal 2029 to $40 billion.
The handset slowdown is expected to hit Qualcomm sooner than its long‑term data‑center plans. CounterPoint Research reported that global smartphone shipments fell 11 % year‑over‑year in Q2, the lowest second‑quarter figure in 13 years. Qualcomm’s CMDA Technologies segment, which includes smartphone, Internet‑of‑Things, and automotive sales, is forecast to decline 8 % year‑over‑year to $8.2 billion. Handset sales alone are projected to drop roughly 21 % to $4.9 billion, while automotive‑related sales are expected to rise 49 % to $1.4 billion.
The data‑center push is part of a broader strategy to diversify the company’s revenue streams. Qualcomm’s investor day highlighted the company’s intention to compete in the growing cloud‑computing market, where it plans to leverage its expertise in mobile processors and connectivity. The projected $5 billion in 2027 and $15 billion in 2029 from data‑center sales represent a significant shift from the chipmaker’s traditional focus on mobile silicon.
The upcoming earnings release will provide a detailed view of how the memory shortage is affecting Qualcomm’s supply chain, pricing, and sales mix. It will also clarify whether the company’s data‑center initiatives are beginning to offset the decline in handset revenue.
In summary, Qualcomm’s Q3 results will reveal the extent of the impact that the global memory shortage is having on smartphone sales, the current state of its data‑center business, and the company’s outlook for non‑handset revenue. Investors will be watching for the company’s guidance on handset versus data‑center growth, as well as any adjustments to its fiscal 2029 targets.
Analysts expect the company to report earnings per share of $2.21 on revenue of $9.6 billion for the quarter, down from $2.77 and $10.3 billion in the same period last year. The decline mirrors a broader slowdown in the handset market, where consumers are keeping devices longer and manufacturers are raising prices to offset higher memory and storage costs.
The memory shortage, driven by the reallocation of manufacturing capacity to AI data‑center products, has pushed DRAM and NAND prices upward. A Bloomberg‑reported analyst, Stacy Rasgon, told Yahoo Finance that the shortage is “sucking up a lot of the supply” and that unit growth in the smartphone sector has turned negative.
To reduce its dependence on handset revenue, Qualcomm has been expanding into the AI‑driven data‑center segment. At its investor day in June, the company showcased a line of servers that combine an AI accelerator, a central processing unit, memory, and rack‑scale architecture. CFO Akash Palkhiwala told Yahoo Finance that the data‑center portfolio is projected to generate $5 billion in revenue in fiscal 2027 and that the company has doubled its non‑handset sales target for fiscal 2029 to $40 billion.
The handset slowdown is expected to hit Qualcomm sooner than its long‑term data‑center plans. CounterPoint Research reported that global smartphone shipments fell 11 % year‑over‑year in Q2, the lowest second‑quarter figure in 13 years. Qualcomm’s CMDA Technologies segment, which includes smartphone, Internet‑of‑Things, and automotive sales, is forecast to decline 8 % year‑over‑year to $8.2 billion. Handset sales alone are projected to drop roughly 21 % to $4.9 billion, while automotive‑related sales are expected to rise 49 % to $1.4 billion.
The data‑center push is part of a broader strategy to diversify the company’s revenue streams. Qualcomm’s investor day highlighted the company’s intention to compete in the growing cloud‑computing market, where it plans to leverage its expertise in mobile processors and connectivity. The projected $5 billion in 2027 and $15 billion in 2029 from data‑center sales represent a significant shift from the chipmaker’s traditional focus on mobile silicon.
The upcoming earnings release will provide a detailed view of how the memory shortage is affecting Qualcomm’s supply chain, pricing, and sales mix. It will also clarify whether the company’s data‑center initiatives are beginning to offset the decline in handset revenue.
In summary, Qualcomm’s Q3 results will reveal the extent of the impact that the global memory shortage is having on smartphone sales, the current state of its data‑center business, and the company’s outlook for non‑handset revenue. Investors will be watching for the company’s guidance on handset versus data‑center growth, as well as any adjustments to its fiscal 2029 targets.
