Qualcomm (NASDAQ:QCOM) Shares Drop After Profit Outlook Reveals Margin Pressures

NEW YORK, July 30, 2026, 09:04 EDT (premarket)

Qualcomm shares were signaled at $151.37, a decrease of 2.8%, as of 09:00 EDT. The stock had dropped around 5% earlier.
Midpoint guidance for fiscal fourth-quarter revenue exceeded analyst expectations, while adjusted earnings guidance fell short by nearly 9%.
Automotive and IoT accounted for 40.2% of total chip revenue, helping to counterbalance 61% of losses seen in handset sales.

Qualcomm stock was set to open down 2.8% at $151.37 as of 09:00 EDT, after earlier dropping toward a 5% loss. Nasdaq futures advanced by around 1.5%. The regular trading session was scheduled to begin at 09:30 EDT.

Weak sales guidance was not the cause. Qualcomm’s fourth-quarter revenue midpoint is 0.8% higher than analyst consensus, while its adjusted earnings midpoint is 8.9% lower. Margins are the concern.

Below, company ranges are shown alongside analyst estimates sourced by Reuters. The differences at the midpoints are based on these numbers.

Fiscal fourth-quarter outlook compared to analyst projections

Metric	Qualcomm forecast	Analyst projection	Gap at guidance midpoint
Revenue	$9.7B-$10.5B	$10.02B	+0.8%
Adjusted EPS	$2.05-$2.25	$2.36	-8.9%
QCT chip revenue	$8.4B-$9.0B	$8.49B	+2.5%

Qualcomm forecast a 23%-25% earnings-before-tax margin for its QCT chip division. The 24% midpoint stands two percentage points under the third quarter and is six points lower compared to the same period last year.

The company cited rising expenses in wafers, assembly, testing, packaging, and memory. It intends to implement price hikes beginning September 1. The positive impact is expected to show progressively as contracts are updated. “We’re just passing through big cost increases that we have,” CEO Cristiano Amon said. Reuters

Revenue for the fiscal third quarter decreased by 4% to $9.95 billion. Adjusted earnings dropped 20% to $2.21 per share. The business mix shifted significantly, with automotive and internet-of-things sales growing as handset revenue declined.

QCT revenue composition shift

Business	Q3 FY2026 revenue	Year-on-year change	Current QCT mix	QCT mix previous year
Handsets	$5.09B	-20%	59.8%	70.4%
Automotive	$1.59B	+61%	18.7%	10.9%
IoT	$1.83B	+9%	21.5%	18.7%
Automotive and IoT	$3.42B	+28%	40.2%	29.6%

Automotive and IoT contributed an additional $753 million compared to the previous year. This offset 61% of the $1.24 billion drop seen in handsets. Together, their portion of QCT increased by 10.6 percentage points. However, QCT’s earnings before tax declined 18%, and its margin narrowed to 26% from 30%.

Apple NASDAQ:AAPL becomes the next focal point. Qualcomm anticipates its modem share in the upcoming iPhone will fall significantly short of its earlier 20% projection. The accelerated drop was due to supply availability, according to Amon.

Qualcomm is forecasting approximately $5.2 billion in handset revenue for the fourth quarter, surpassing the $5.03 billion average analyst estimate reported by Reuters. The company’s management also anticipates a return to double-digit sequential growth for China Android revenue.

This makes the quarter focus more on pricing and product mix rather than sales volume. Qualcomm could surpass revenue estimates but still fall short on profit. The guidance figures already reflect this divergence.

Management projects that non-handset revenues will rise by more than 60% in fiscal 2027, after an anticipated 24% gain in fiscal 2026. The higher revenue is seen offsetting all Apple product sales from fiscal 2026. These figures represent management’s projections and goals, not actual results.

Management’s plan for diversification

Measure	FY2026 estimate	FY2027 target	FY2029 target
Growth in non-handset revenue	+24%	Above +60%	—
Revenue from data centres	$0.3B	$5B	Over $15B
Combined non-handset revenue	—	—	$40B

Bob O’Donnell, chief analyst at TECHnalysis Research, stated, “The good news longer term is the company is quickly pivoting to non-handset revenues.” Meanwhile, some analysts noted that initial data centre projects are typically less profitable. Reuters

Valuation has declined, though forecast risk persists. Qualcomm is valued at 14.31 times its projected 12-month earnings. Nvidia NASDAQ:NVDA stands at 17.49 times, while Intel NASDAQ:INTC trades at 43.85 times. Following the report, no fewer than six analysts lowered their price targets for Qualcomm.

Comparison of forward valuations

Company	Forward price-to-earnings ratio	Premium over Qualcomm
Qualcomm NASDAQ:QCOM	14.31x	—
Nvidia NASDAQ:NVDA	17.49x	22%
Intel NASDAQ:INTC	43.85x	206%

Qualcomm’s average price target is currently $208.68, suggesting a potential upside of around 38% based on the premarket indication at 09:00. The difference could be due to long-term growth expectations and targets that have yet to be fully adjusted. Near-term earnings revisions are likely to play a more significant role.

Risks: Input costs might rise faster than prices. Apple could face further share declines. Early-stage data-centre initiatives might reduce margins ahead of scaling up. Fluctuating demand in China and component supply are significant variables.

This quarter, investors are advised to monitor QCT margin even more closely than QCT revenue. Margins recovering above the midpoint of 24% guidance would confirm the effectiveness of the pricing response. If QCT misses, it would indicate that diversification is driving sales growth ahead of profit gains.

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Further analysis

Editorial insight

What is causing Qualcomm shares to decline today?

QCOM ended July 29 at $155.68, losing 4.42%. The Nasdaq Composite slipped 1.74%, with Qualcomm trailing the tech-focused benchmark. Premarket at 9:00 a.m. ET on July 30 saw shares at $151.37, a further drop of 2.77%. Investors reacted to softer profit forecasts, a more rapid decline in Apple business, and increased manufacturing expenses. Public

Did Qualcomm surpass Wall Street expectations for its fiscal third quarter?

Revenue reached $9.947 billion, a 4% decrease compared to the previous year, but outperformed Wall Street’s approximate revenue forecast of $9.69 billion. Adjusted EPS came in at $2.21, representing a 20% drop from a year ago. Consensus services indicated a range between $2.23 and $2.24, so the shortfall was minor. GAAP net income slipped 25% to $2.002 billion, while GAAP EPS was $1.87.

What does the outlook for the fourth quarter indicate about the pace of earnings?

Qualcomm projected revenue in the range of $9.7 billion to $10.5 billion, with the midpoint close to $10.1 billion, broadly in line with the consensus of $10.07 billion. The company expects adjusted earnings per share between $2.05 and $2.25, with the central value at $2.15, about 9% below analyst forecasts of $2.36. For the chip business, QCT, Qualcomm forecast a pre-tax margin of 23%-25%, compared with 26% previously. Revenue remains steady, but profitability is softer.

What is the scale of the drop in revenue for smartphones and Apple?

QCT handset revenue dropped 20% to $5.086 billion. Handsets continued to account for about 51% of overall company revenue. Revenue from Chinese OEM handsets is projected to increase by double digits sequentially in fiscal Q4. However, the share of modems in upcoming iPhone models will be significantly less than the earlier 20% prediction. Management anticipates Apple product revenue will decline around 50% from September to December. That reduction occurred sooner than investors had anticipated.

Is Qualcomm’s expansion outside the smartphone sector generating sufficient growth?

Automotive revenue climbed 61% year-over-year to $1.588 billion. IoT revenue rose 9%, reaching $1.830 billion. Combined, these segments contributed around 40% of QCT revenue, rising 28%. BMW selected Qualcomm for its upcoming vehicle platforms, with financial details not disclosed. Two custom-chip programs for hyperscalers are expected to start generating revenue in the December quarter. Qualcomm aims for $5 billion in data-center revenue for fiscal 2027, and $15 billion by 2029. While growth is evident, those long-term goals have yet to be proven.

Will Qualcomm be able to recover its margins through higher prices?

QCT reported a four-point decline in pre-tax margin, now at 26%. The forecast for fiscal Q4 continues to decrease, set between 23% and 25%. Price hikes will start on September 1, and are expected to hit double-digit percentages in several regions. Management anticipates the advantages will be realized over the next two quarters rather than right away. The baseline QCT gross margin is in the 48%-50% range. Initial custom chips for data centers may lower this average by 1.5 to 2 points. The timing of margin recovery is still unclear.

Is Qualcomm trading below its perceived value following the selloff?

Qualcomm had a market capitalisation near $164 billion at the July 29 close. The trailing price-to-earnings ratio was 16.9, with an indicated dividend yield of 2.36%. According to Reuters, the forward P/E after earnings came in at 14.31. Following at least six analyst downgrades, the average price target reached $208.68, representing a potential gain of around 34% from the close, though there is significant uncertainty. Shares of QCOM were still 40% under their 52-week high of $259.92. The stock appears undervalued, though earnings estimates remain in flux. MarketWatch

What level of downside protection do dividends and buybacks provide?

Qualcomm distributed $2.3 billion to shareholders for the quarter. The company repurchased eight million shares for $1.4 billion. Dividend payouts reached $973 million, amounting to $0.92 per share. Based on the closing price on July 29, the annual dividend of $3.68 per share offers a yield close to 2.36%. The upcoming dividend will be paid September 24 to shareholders on record as of September 3. In March, Qualcomm revealed a fresh $20 billion share buyback program. Capital returns provide support, though shrinking profit projections remain a concern.

What is the short-term outlook for QCOM stock?

Caution prevails in the near term until the pace of earnings estimate reductions eases. For a reversal to the upside, Q4 EPS should approach $2.25 and QCT margin needs to be close to 25%. Additional requirements are double-digit handset growth in China and clear December data-center revenue. Risks to the downside increase if Apple sales soften, pricing benefits are delayed, or margins come in under guidance. While analyst price targets indicate potential upside, their predictive strength is reduced following recent cuts. This analysis examines scenarios and does not serve as a definitive price forecast.

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Roman Perkowski is a senior markets reporter at TS2.tech, specializing in stocks, technology and macroeconomic trends. A graduate of the Cracow University of Economics, he previously worked in investment research and corporate finance. His coverage helps readers understand the key forces driving global financial markets and emerging industries. Follow Roman Perkowski on Google News.