On November 4, 2026 (US time), Qualcomm reported results for its fiscal fourth quarter of 2026, which ended September 27. Non-GAAP earnings per share and adjusted revenue both beat market expectations but declined from a year earlier. Automotive revenue surged 89% year over year to $1.99 billion, yet revenue for QCT, the semiconductor business as a whole, fell 8%. Even combined, the increases in automotive and IoT covered only 56% of the decline in smartphone revenue. Moving away from smartphone dependence will likely require the data center business to make a real revenue contribution.
Beating expectations, but revenue and profit still fell year over year
Fourth-quarter revenue was $10.322 billion on a GAAP (US generally accepted accounting principles) basis, down 8% year over year, and $10.442 billion on a non-GAAP basis, down 7%. Non-GAAP EPS was $2.17, down 28% from $3.00 in the same period a year earlier. According to the Zacks consensus reported by the Associated Press, analysts expected EPS of $2.16 and revenue of $10.15 billion. Qualcomm beat both forecasts, but revenue and earnings were still lower than a year earlier. Non-GAAP figures are adjusted numbers that exclude items such as stock-based compensation, acquisition-related costs, and special tax factors.
Full-year GAAP EPS was $12.70, up 153% from $5.01 the previous year. However, that figure includes a $5.7 billion tax benefit ($5.32 per share) from the release of a valuation allowance. Non-GAAP EPS for the year was $10.54, down 12% from the prior year. Excluding accounting one-offs, it was clearly a tough year for profitability as well.
Qualcomm's business is divided broadly into QCT, which sells semiconductors, and QTL, which handles patent licensing. Fourth-quarter QCT revenue was $5.137 billion from handsets (down 26% year over year), $1.99 billion from automotive (up 89%), and $1.888 billion from IoT (up 4%). In its earnings materials, the company touts automotive as its "first $2 billion quarter," but the disclosed figure is actually $1.99 billion, so the $2 billion is a rounded expression.
Qualcomm also announced renewals of long-term license agreements with Apple, Huawei, and Transsion, as well as a multigenerational data center collaboration with Amazon. However, it did not disclose the contract value of the Amazon collaboration or when products will ship.
Automotive and IoT growth offsets only 56% of the smartphone decline
To judge how far Qualcomm has reduced its smartphone dependence, it helps to compare QCT revenue by end market. Here are the year-over-year changes for the fourth quarter:
| QCT revenue ($ million) | Fiscal Q4 2025 | Fiscal Q4 2026 | YoY change |
|---|---|---|---|
| Handsets | 6,961 | 5,137 | -1,824 |
| Automotive | 1,053 | 1,990 | +937 |
| IoT | 1,807 | 1,888 | +81 |
Automotive revenue rose $937 million and IoT rose $81 million, for a combined $1.018 billion. Handset revenue, meanwhile, fell $1.824 billion. Dividing the combined automotive and IoT gain by the handset decline gives 55.8%, meaning only about 56% of the decline was offset. This comparison excludes the QTL licensing business and the data center business.
That said, the revenue mix has changed significantly. Automotive and IoT rose from 29% of QCT revenue a year earlier to 43%, while handsets fell from 71% to 57%. Diversification is clearly progressing, but growth in automotive and IoT alone cannot make up for the slump in handsets.
Applying the same method to fiscal Q3 2026, the automotive gain of $604 million plus the IoT gain of $149 million, or $753 million in total, equaled about 61% of the $1.242 billion handset decline. In Q4 that ratio fell to 56%, so the ability to offset the decline actually weakened. QTL, the patent licensing business, also saw fourth-quarter revenue fall 7% year over year to $1.304 billion. Full-year revenue was $5.556 billion, roughly flat against $5.582 billion the previous year.
The outlook for fiscal Q1 2027 (October–December 2026) shows the same trend. Qualcomm guided QCT revenue to $9.0–9.6 billion; the $9.3 billion midpoint is 12.4% below $10.613 billion a year earlier. This figure includes the data center business. Total company revenue guidance of $10.4–11.2 billion has a midpoint of $10.8 billion, about 12% below $12.252 billion in the prior-year period.
In this environment, the data center business is expected to be a new pillar of growth. In the earnings materials, CEO Cristiano Amon said non-smartphone revenue should grow more than 60% in fiscal 2027 and reaffirmed the $5 billion data center revenue target. At 150 yen to the dollar, $5 billion is about 750 billion yen, a scale that would materially affect overall results if achieved.
Would that target be enough to offset the smartphone decline? Multiplying fourth-quarter handset revenue of $5.137 billion by four gives roughly $20.5 billion a year, about $3.5 billion below the fiscal 2026 figure of $24.072 billion. If the fourth-quarter revenue level persisted for a full year, $5 billion in data center revenue would exceed that shortfall. However, if the smartphone decline widens further, the offset would shrink, and this quarter's results do not allow us to verify a concrete path to the $5 billion target, including the Amazon collaboration.
Smartphone stabilization and price pass-through are key to a recovery
There are some signs that the smartphone business may be bottoming out. Fourth-quarter handset revenue of $5.137 billion rose 1.0% from $5.086 billion in the third quarter. Though small, this halt in the decline is worth noting for any recovery. Still, handset revenue remains down a steep 26% year over year, so it is too early to conclude that a genuine recovery has begun.
Another point of interest is the pass-through of costs into product prices. Qualcomm says input costs are rising across the industry, from manufacturing processes to memory. According to the company, the full effect of passing those higher costs on through product prices is expected to show up in QCT gross margin in the second half of fiscal 2027. Margins could improve ahead of a revenue recovery.
However, improving margins and escaping smartphone dependence are separate issues. Even if price pass-through improves profitability, the shift in revenue structure cannot be called sufficient if gains in automotive and IoT fail to offset the smartphone decline. The key figure to watch is the relationship between the increase in non-smartphone revenue and the decrease in smartphone revenue in October–December 2026.
The offset ratio was 61% in the third quarter and 56% in the fourth. If it exceeds 80% next quarter, that would suggest automotive and IoT growth is starting to catch up with the smartphone slump. Whether QCT's year-over-year revenue decline is smaller than the roughly 9.5% implied by the top of company guidance, $9.6 billion, is also an important indicator.
If data center revenue then becomes concretely visible in quarterly results, and its increase added to the automotive and IoT gains exceeds the smartphone decline, Qualcomm's business transformation will have become clear in its results as well. Following the rapid growth of automotive, how quickly the data center business begins contributing revenue will shape Qualcomm's growth from here.