Qualcomm forecasts strong earnings amid smartphone rebound

• Qualcomm said it anticipates sales with a midpoint of $12.2 billion and adjusted profit of $3.40 per share.
• Securities filings show Apple, Samsung, and China’s Xiaomi each still account for over 10% of Qualcomm’s revenue.
• A significant wave of consumers is upgrading to premium smartphones to leverage AI applications, effectively “hollowing out” the midrange segment, especially in China and India.
• Qualcomm faces a balancing act between sustaining growth in traditional smartphone chips and capturing new opportunities in AI and automotive sectors, as customer relationships continue to evolve.

US chipmaker Qualcomm reported a robust financial outlook for its upcoming quarter, projecting sales and profits above Wall Street expectations due to a resurgence in premium smartphone demand.

However, the prospect of declining business from key customer Samsung next year sent shares down 2.7 per cent in after-hours trading, erasing some of the day’s nearly 4 per cent gains.

For its current fiscal first quarter ending in December, Qualcomm said it anticipates sales with a midpoint of $12.2 billion and adjusted profit of $3.40 per share.

Qualcomm provides modem chips for smartphones, including a complete share in Samsung Electronics’ latest Galaxy S25 lineup. However, CEO Cristiano Amon revealed the company is preparing for a reduced share—about 75 per cent—in the Galaxy S26, signaling softer future revenues from the Korean electronics giant.

“When you think about Galaxy S26, we’re planning for 75 per cent—that’s what we expect,” Amon told Reuters.

Diversification and market trends

In response to changing dynamics with major clients such as Apple and Samsung, Qualcomm has been diversifying into laptops, automobiles, and data centre chips. Notably, Apple is moving toward building its own modems, shift analysts have been monitoring closely. Securities filings show Apple, Samsung, and China’s Xiaomi each still account for over 10 per cent of Qualcomm’s revenue.

Meanwhile, Amon highlighted on the company’s earnings call that a significant wave of consumers is upgrading to premium smartphones to leverage AI applications, effectively “hollowing out” the midrange segment, especially in China and India.

“You don’t have anything in the middle,” Amon noted. “We continue to see an expansion of the premium tier.”

AI expansion and new clients

Qualcomm announced last month a new line of AI data centre chips, securing Humain—a Saudi-backed AI firm—as a client. Discussions are ongoing with a major “hyperscaler,” Amon confirmed.

“We’re very pleased with the outcome of that conversation,” he said, hinting at further business in the high-growth AI computing sector.

For the fiscal fourth quarter ended September 28, Qualcomm reported revenue of $11.27 billion and adjusted profit of $3 per share. Handset chip revenue climbed 14 per cent year-over-year to $6.96 billion, above Visible Alpha estimates.

Chief Financial Officer Akash Palkhiwala guided for handset revenue to grow at a “low teens” percentage in the fiscal first quarter, implying at least $7.7billion.

Despite concerns regarding client transitions, CEO Amon is confident: “Phones are slowly seeing apps becoming more capable, and that drives people to buy a more capable device, no different than what we saw right after the pandemic,” he said.