Qualcomm’s second quarter was met with a negative market reaction, as the company reported a year-on-year decline in sales and a significant contraction in operating margins. Management cited persistent weakness in the global smartphone market, driven by elevated memory prices and input cost pressures, as primary reasons for the decline. CEO Cristiano Amon described the environment as one of “unprecedented memory prices, higher manufacturing and input costs as well as supply chain shortages,” which not only impacted handset revenues but also weighed on QCT gross margins. Despite these headwinds, management pointed to record automotive revenues and continued progress in industrial IoT as areas of relative strength.
Is now the time to buy QCOM? Find out in our full research report (it’s free for active Edge members).
Qualcomm (QCOM) Q2 CY2026 Highlights:
- Revenue: $9.95 billion vs analyst estimates of $9.66 billion (4% year-on-year decline, 3% beat)
- Adjusted EPS: $2.21 vs analyst expectations of $2.22 (in line)
- Adjusted Operating Income: $2.78 billion vs analyst estimates of $2.74 billion (27.9% margin, 1.2% beat)
- Revenue Guidance for Q3 CY2026 is $10.1 billion at the midpoint, above analyst estimates of $10 billion
- Adjusted EPS guidance for Q3 CY2026 is $2.15 at the midpoint, below analyst estimates of $2.38
- Operating Margin: 16.3%, down from 26.6% in the same quarter last year
- Inventory Days Outstanding: 167, up from 146 in the previous quarter
- Market Capitalization: $173.7 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Qualcomm’s Q2 Earnings Call
- Joshua Buchalter (TD Cowen) asked about the timeline for QCT gross margin recovery. CFO Akash Palkhiwala explained that margin improvement will be gradual, as price increases phase in over successive product cycles.
- Joseph Cardoso (JPMorgan) questioned the magnitude and breadth of price increases. Palkhiwala stated that price hikes are double-digit and broad-based, but noted that contracts and product cycles will influence the pace of realization.
- Stacy Rasgon (Bernstein) pressed on the accelerated reduction of Apple revenues and the impact on Qualcomm’s revenue profile. Palkhiwala clarified that lower Apple share is driven by supply constraints and will be offset by non-handset revenue growth.
- Joe Moore (Morgan Stanley) inquired about the mix and future drivers of automotive revenue, specifically the role of ADAS. Management highlighted a transition to platform-wide partnerships and increasing silicon content as key drivers.
- Benjamin Reitzes (Melius Research) asked about expanding the data center customer pipeline. CEO Cristiano Amon indicated that additional customer engagements depend on demonstrating HBC silicon performance in the coming quarters.
Catalysts in Upcoming Quarters
In the next few quarters, our team will closely monitor (1) the scale and pace of data center revenue contributions from custom silicon and AI accelerators, (2) continued growth in automotive, especially as new Snapdragon digital chassis platforms ramp, and (3) execution on pricing actions to recover gross margins as supply chain costs remain elevated. The impact of the Modular acquisition on Qualcomm’s AI software strategy will also be an important area to track.
Qualcomm currently trades at $162, up from $155.68 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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