Qualcomm (QCOM) announced its second quarter earnings on Wednesday, topping Wall Street estimates on top and bottom lines, but falling short on Q3 guidance.
The company said it anticipates third quarter revenue of between $9.2 billion and $10 billion. Analysts were looking for $10.23 billion.
But Qualcomm also said it sees the market for Chinese smartphones bottoming in the current quarter, a potentially positive sign for the company. It also said it expects to ship custom silicon to an unnamed hyperscaler later this year.
Qualcomm stock rose more than 10% in premarket trading on Thursday.
For the second quarter, Qualcomm reported earnings per share (EPS) of $2.65 on revenue of $10.59 billion. Wall Street analysts were looking for EPS of $2.55 on revenue of $10.56 billion, according to Bloomberg analyst consensus estimates.
Qualcomm saw EPS of $2.85 and revenue of $10.83 billion in the same quarter last year.
The company’s QCT business segment brought in revenue of $9.07 billion versus expectations of $9.13 billion.
Qualcomm’s licensing segment topped out at $1.38 billion versus an anticipated $1.32 billion.
According to the International Data Corporation, global smartphone shipments declined 4.1% in the first quarter to 289.7 million units. That broke a 10-quarter streak of growth that began in mid-2023.
Worse still, the market research firm says the first quarter drop is a “mild precursor” for what the remainder of 2026 has in store for the market.
According to Bernstein Research’s Stacy Rasgon, the broader smartphone space could face double-digit unit declines this year.
Qualcomm’s handset business makes up the vast majority of its overall revenue, though it’s working to diversify into other areas, including data center chip sales and increasingly pushing its automotive and robotics technologies.
But Rasgon says those efforts are unlikely to offset the drop in smartphone shipments.
The company could, however, provide Wall Street with some good news in June, when CEO Cristiano Amon provides the keynote address at the annual Computex conference in Taiwan.
Titled “AI Together,” the speech could offer up a better look at Qualcomm’s data center strategy and how it plans to gain share in the space.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on X/Twitter at @DanielHowley.
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