Jul 29, 2026 earnings call — Qualcomm expands into data center and automotive
Closed Modular acquisition and entered data center; expect annualized automotive sales of approximately $7 billion exiting fiscal '26.
Revenue $9.9B (est $9.7B) · EPS $2.21 (est $2.23) · Next-quarter revenue outlook $9.7B–$10.5B
Key quotes
"This is the ideal and logical time for Qualcomm to enter the market as agentic workloads are reshaping the economics of AI."
"This quarter, we signed a landmark expanded agreement with BMW, winning a highly competitive selection process to become the lead compute silicon provider for their next-generation ADAS as well as digital cockpit."
"In the short term, the entire industry continues to be impacted by unprecedented memory prices, higher manufacturing and input costs as well as supply chain shortages driven by overall data center demand."
Analyst Q&A 7
QCT gross margin recovery timing
Q (Joshua Buchalter · TD Cowen): Analyst asked how QCT gross margins will get back to prior levels and how long it will take for ASP increases to match rising input costs. He also asked how data center ASIC revenue will ramp through fiscal 2027.
A: Management said two main factors hurt margins: a weaker premium product mix and higher input costs. They are taking broad price increases that will show up gradually over the next couple of quarters as contracts and product cycles allow, and they expect margins to return to the historical range. On data center ASICs, revenue starts in the December quarter and should ramp through the year from two custom chip engagements with global hyperscalers; they have POs and wafers started and are very confident.
"And we expect this benefit to show up in our gross margins over the next couple of quarters." — Akash Palkhiwala
Pricing actions and handset seasonality
Q (Joseph Cardoso · JPMorgan): Analyst asked for details on the magnitude and breadth of Qualcomm’s price increases and how they will affect consumer handset demand. He also asked about handset seasonality into the December quarter given Apple and China OEM recoveries.
A: Management said the pricing action is broad across end markets, will layer in over time because of contracts and product cycles, and the scale of the increase is double digit and consistent with peers. They said Apple share in new launches will be materially lower than 20% and Apple-related revenue will fall about 50% from September to December, while Android growth and data center ramp will offset that, so December should be slightly up sequentially and the seasonality profile has changed.
"So the way you should think about it is this is a pricing action that we are taking broadly across different end markets." — Akash Palkhiwala
Apple allocation and gross margin effect
Q (Stacy Rasgon · Bernstein): Analyst asked whether Qualcomm consciously reduced supply to Apple to reallocate silicon elsewhere and how the data center ramp will affect gross margins.
A: Management said it was not deliberately starving Apple; supply constraints were a factor and discussions resulted in materially less than 20% share and Apple revenue in 2027 being less than the prior guidance of a little over $2 billion. They said growth in non-handset areas, which they expect to be greater than 60% year-over-year, will replace Apple product revenue, and that baseline gross margin should return to the 48% to 50% range while data center custom chips will be lower margin and drag QCT weighted average gross margin by 1.5% to 2%.
"So you should think of it as our baseline business has a certain gross margin range, which has been in the 48% to 50% range." — Akash Palkhiwala
Automotive mix and supply chain
Q (Joseph Moore · Morgan Stanley): Analyst asked what the automotive revenue mix looks like now, how much ADAS and autonomous content is in it, and whether wafer supply constraints are a concern.
A: Management said ADAS is a significant portion of their design-win pipeline and they are winning across platforms rather than individual sockets, which will drive revenue over several years. They added that next-generation silicon brings an order-of-magnitude increase in processing and silicon content, boosting automotive revenue, and that the industry is at high utilization with shortages and price increases across wafers, assembly, and testing; having scale and inventory gives them comfort they can execute.
"As you move to our latest generation silicon, the amount of processing capability, it's an order of magnitude increase." — Cristiano Amon (CEO)
Data center pipeline and China demand
Q (Benjamin Reitzes · Melius): Analyst asked whether Qualcomm’s data center growth could come from more than the two announced customers and how the company sees expansion beyond them. He also asked why management is confident China has bottomed and about Chinese memory supply.
A: Management said existing engagements will expand across custom ASICs, the accelerator (HBC), and CPU ramp from $5 billion to $15 billion with multiproduct, multi-generation growth. They said silicon for HBC will arrive in coming quarters for demonstration and evaluation, which could unlock new opportunities, and on China they noted June was the lowest revenue, they expect a double-digit increase in September, channel inventory has thinned, and Chinese memory has been used for years and will strengthen supply.
"In the coming quarters, we're going to have silicon, and we are going to be able to do silicon demonstration evaluation." — Cristiano Amon (CEO)
U.S.-China restrictions and handset outlook
Q (Liam Pharr · BofA): Analyst asked whether U.S.-China restrictions could affect Qualcomm’s data center engagements and how handset TAM looks for 2027 if memory prices remain a headwind.
A: Management said current engagements are not restricted and other companies are also providing solutions for China, so it is not a concern today. They said the handset market will be down low teens versus '25 to '26, with impact mainly in lower tiers; QCT Android revenue is down 20% year-over-year with an EPS impact greater than $1.50, and longer term Snapdragon leadership and phone AI could restore handset scale and be a tailwind as markets normalize.
"For the engagements we have today we're not restricted." — Cristiano Amon (CEO)
QTL revenue and OpEx trajectory
Q (Christopher Caso · Wolfe): Analyst asked whether QTL revenues will continue to hold up and if price increases help QTL. He also asked about the expected path of OpEx after recent acquisitions and spending ramps.
A: Management said QTL behaves per its model: royalties are capped based on device ASP so price increases below the cap can help QTL, while increases above the cap do not change QTL revenue; it's execution of licenses in place. On OpEx, they reiterated no change to Investor Day guidance, OpEx will reflect Alphawave and Modular, and spending growth will be driven by investments in data center to execute the CPU and accelerator roadmap.
"Yes, Chris, you should just think of QTL consistent with the model it has, right, which is the -- there is a cap on the total royalties based on the device ASP." — Akash Palkhiwala