QUALCOMM Incorporated (QCOM) Q1 2026 Earnings Call Transcript
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Overview
The earnings call highlights strong financial performance with record revenues in multiple segments and robust shareholder returns. The Q&A reveals management's confidence in handling memory shortages and automotive growth. Although some uncertainties remain, particularly with Huawei, the company shows resilience and strategic focus. The new partnership with Volkswagen and positive stockholder returns further support a positive sentiment.
Key Financial Performance
Total Revenue $12.3 billion, a record high, with no specific year-over-year percentage change mentioned. The increase was attributed to strong performance in QCT and QTL segments.
Non-GAAP EPS $3.50, a record high, with no specific year-over-year percentage change mentioned. The increase was driven by strong revenue performance.
QCT Revenue $10.6 billion, a record high, with strong year-over-year growth in automotive and IoT segments. Growth was driven by flagship smartphones and demand for Snapdragon Digital Chassis platforms.
QCT Handset Revenue $7.8 billion, a record high, reflecting the benefit of recently launched flagship smartphones. No specific year-over-year percentage change mentioned.
QCT IoT Revenue $1.7 billion, a 9% year-over-year increase, driven by demand across consumer and networking products.
QCT Automotive Revenue $1.1 billion, a 15% year-over-year increase, driven by increased demand for Snapdragon Digital Chassis platforms.
QTL Revenue $1.6 billion, with no specific year-over-year percentage change mentioned. The increase was driven by higher units and favorable mix.
QCT EBT Margin 31%, exceeding the long-term target of 30%, with no specific year-over-year percentage change mentioned.
Stockholder Returns $3.6 billion returned, including $2.6 billion in stock repurchases and $949 million in dividends. No specific year-over-year percentage change mentioned.
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Operating Highlights
Snapdragon 8 Elite: ByteDance launched their first Agentic AI smartphone powered by this platform, marking a significant milestone in AI-native smartphones.
Snapdragon X2 Plus: Introduced for enterprise and commercial PCs, featuring the third-generation Qualcomm Oryon CPU with significant performance improvements.
Dragonwing IQ-X series: Launched for industrial PCs, offering best-in-class compute performance and efficient Edge AI.
Dragonwing IQ10 series: Introduced for robotics, supporting advanced perception and motion planning for household, industrial, and humanoid robots.
Automotive collaborations: Signed a letter of intent with Volkswagen Group for advanced infotainment and connectivity capabilities. Collaborations with Hyundai Mobis, Leapmotor, and others expanded.
Industrial IoT: Expanded portfolio with AI-based low-power image signal processing solutions and new processors for various industrial applications.
Record revenues: Achieved $12.3 billion in total revenue, with $10.6 billion from QCT and $1.6 billion from licensing.
Automotive revenue growth: Automotive revenues grew 15% year-over-year to $1.1 billion.
IoT revenue growth: IoT revenues grew 9% year-over-year to $1.7 billion.
AI and robotics: Expanded into advanced robotics with a full suite of technologies, leveraging expertise in Edge AI and sensor fusion.
Data center solutions: Acquired Alphawave Semi and Ventana Micro Systems to strengthen platforms for next-generation AI data centers and RISC-V CPU development.
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Risk or Challenges
Handset Industry Constraints: The handset industry is expected to face constraints due to the availability and pricing of memory, particularly DRAM. Memory suppliers are redirecting manufacturing capacity to HBM to meet AI data center demand, leading to industry-wide memory shortages and price increases. This is causing handset OEMs, especially in China, to reduce chipset inventory and scale back build plans.
Memory Industry Dynamics: Increasing demand for memory solutions in AI data centers is creating uncertainty in memory supply and pricing for handset OEMs. This has led to reduced chipset orders and cautious planning by OEMs, impacting Qualcomm's financial outlook and revenue guidance for the upcoming quarter.
Economic and Market Uncertainty: While the global economic environment is stable, there is near-term uncertainty in the memory supply chain and its impact on handset production and sales, particularly in the premium and high-tier segments.
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Guidance & Outlook
Handset Industry Constraints: The handset industry will face constraints due to the availability and pricing of memory, particularly DRAM, as memory suppliers redirect manufacturing capacity to HBM for AI data centers. This will likely define the scale of the handset industry through the fiscal year.
Snapdragon Platforms and Market Share: For Samsung's upcoming premium-tier devices, Qualcomm expects approximately 75% share, consistent with prior expectations. The company also highlighted the launch of ByteDance's first Agentic AI smartphone powered by Snapdragon 8 Elite, marking a transition toward AI-native smartphones.
PC Market Expansion: Qualcomm introduced the Snapdragon X2 Plus for enterprise and commercial segments, powered by the third-generation Qualcomm Oryon CPU. The company plans to commercialize 150 Snapdragon X-powered PCs this year.
Automotive Growth: Demand for Snapdragon Digital Chassis solutions remains strong. Qualcomm signed a letter of intent for a long-term supply agreement with Volkswagen Group and announced collaborations with Hyundai Mobis, Leapmotor, and others. Automotive revenue growth is expected to accelerate to greater than 35% year-over-year in the second fiscal quarter.
IoT and Robotics Expansion: Qualcomm continues to expand its portfolio in industrial IoT and robotics. The company introduced new Dragonwing processors and the Dragonwing IQ10 series for advanced robotics, targeting rapid growth in the robotics space.
Data Center Solutions: Qualcomm is developing specialized and power-efficient AI platforms for next-generation inferencing data centers. The company completed acquisitions to strengthen its platforms and plans to provide updates at the next investor event.
Financial Guidance for Q2 Fiscal 2026: Revenues are forecasted to be $10.2 billion to $11 billion, with non-GAAP EPS of $2.45 to $2.65. QCT revenues are expected to be $8.8 billion to $9.4 billion, with EBT margins of 26% to 28%. Automotive revenue growth is projected to exceed 35% year-over-year.
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Shareholder Return Plan
Dividends Paid: $949 million in dividends were returned to stockholders in the first fiscal quarter.
Stock Repurchases: $2.6 billion in stock repurchases were conducted in the first fiscal quarter.
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Key Q&A
Q:What factors are driving the weakness in the handset outlook beyond memory pricing?
A:The weakness is 100% related to memory availability. Macroeconomic indicators and handset demand have been strong, but DRAM availability for consumer electronics, especially handsets, is down year-over-year due to prioritization of HBM for data centers. Customers are adjusting production based on available memory.
Q:What is driving the sharp acceleration in auto revenue sequentially?
A:The pipeline built in automotive is translating into revenue as new cars ramp and launch. Record revenues in automotive are driven by share gains, design wins, and partnerships like the one with Volkswagen Group. ADAS and digital cockpit integration in the same chipset are gaining traction.
Q:What is the progress in the data center business and its impact from memory volatility?
A:Progress in the data center business is on track with milestones being met. The company is working with customers like HUMAIN and engaging with hyperscalers. Memory volatility is not significantly disruptive to the data center business, but the overall size of the handset market is determined by memory availability.
Q:How are OEMs prioritizing higher-tier handsets amidst memory shortages?
A:OEMs are likely to prioritize premium and high-tier handsets, which have proven more resilient to price increases. The premium tier continues to expand, and dual flagship strategies are being adopted. However, the overall handset market size will depend on memory availability.
Q:What percentage of the handset business is in China, and what is the seasonality outlook?
A:The company does not break down by regions, but exposure to Chinese OEMs is less than their unit volume suggests. Seasonality in consumer demand is expected to be consistent with past trends, with strong demand for premium tier launches.
Q:What is the outlook for operating expenses (OpEx) given the memory situation?
A:The March quarter guidance is a reasonable way to think about the rest of the year. The focus is on reducing investments in mature businesses to fund diversification priorities, with incremental expenses from acquisitions like Alphawave.
Q:What is the update on the Huawei license and its potential impact?
A:Discussions with Huawei are still underway with no significant updates. The negotiations are distinct from other customer renewals, and there is no immediate risk to other customer relationships.
Q:How is the company planning for sustained DRAM shortages?
A:The company is qualified with all memory providers and has flexibility to work with new and older memory versions. The fiscal year handset market size will be defined by DRAM availability, and the company is monitoring the situation closely.
Q:What is the impact of mix shift towards Snapdragon on QCT EBT margins?
A:A mix shift towards Snapdragon, especially in premium and high tiers, is usually beneficial for QCT EBT margins.
Q:How is the company navigating memory allocation challenges with large OEMs like Apple?
A:Larger OEMs with scale may have better access to memory, but the issue is industry-wide. The company is working with all partners to manage the situation.
Q:What is the update on the data center business and its validation?
A:The data center business is progressing well, with positive feedback from large companies. The focus is on execution, especially in inference and disaggregated data centers, with competitive advantages in power consumption and total cost of ownership.
Q:Review of Unclear Management Responses
A:Management avoided providing direct answers or clarity on the following: 1) Specific details on the Huawei license discussions and sticking points. 2) Exact percentage of handset business in China. 3) Detailed guidance for the June quarter and beyond, citing uncertainty in the memory market. 4) Specific impacts of memory shortages on QTL run rates and potential adjustments. 5) Further details on the data center business progress beyond general statements of positive feedback and execution focus.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ASUS
Agentic
CES
Dragonwing IQ
Edge
Elite Extreme
Hexagon NPU
Hodoyan Vice
IQ series
Lopez Hodoyan
Oryon CPU
Qualcomm
RISC
Snapdragon PCs
agreement
architecture
autonomy
center
class
computing connectivity
core
development
environment
experience
group
handset industry
memory
perception
platform AI
purpose
record revenue
robot
robotics
safety grade
segment
sensing
service provider
supplier
workload
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The earnings call summary reveals a decline in revenue, EPS, and operating margin, primarily due to weaker smartphone demand and increased R&D expenses. The absence of discussions on strategic initiatives or returns, coupled with no significant positive factors like new partnerships or optimistic guidance, further supports a negative sentiment. Despite no explicit risks mentioned, the financial performance downturn suggests a likely negative stock reaction.
QUALCOMM Incorporated (QCOM) Q1 2026 Earnings Call Transcript
Positive2-4
The earnings call highlights strong financial performance with record revenues in multiple segments and robust shareholder returns. The Q&A reveals management's confidence in handling memory shortages and automotive growth. Although some uncertainties remain, particularly with Huawei, the company shows resilience and strategic focus. The new partnership with Volkswagen and positive stockholder returns further support a positive sentiment.
QCOM Slides
QCOM Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
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When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
