US Markets: Why Qualcomm shares are in top focus today with quarterly earnings, growth outlook amid AI costs concerns

Qualcomm shares are in focus on Wall Street on Wednesday, November 4, as the semiconductor manufacturer prepares to announce its fourth-quarter fiscal 2026 financial results after the US stock market closes. Investors will closely monitor the company's revenue, earnings and management commentary amid weakening smartphone demand, rising component costs, concerns over artificial intelligence spending, and increasing competition in the semiconductor industry.

The company's dependence on the smartphone market is emerging as a key concern. While handset chips remain Qualcomm's biggest revenue contributor, Apple's efforts to develop its own cellular modem technology and softer demand for Android smartphones are creating additional challenges for its growth prospects.

These concerns have also weighed on the company's stock performance. On Friday, October 30, Qualcomm shares plunged 11.2% following Intel's earnings announcement, which triggered broader concerns about memory shortages and weakening consumer spending in the personal computer market.

On Wednesday, Qualcomm shares were trading at $172.05, up 4.63%, or $7.62. However, the stock remained down 0.76% year to date.

Qualcomm Q4 earnings preview: What analysts expect

Wall Street analysts expect Qualcomm to report revenue of approximately $10.15 billion for the fourth quarter, while adjusted earnings are projected at $2.16 per share.

These estimates indicate year-over-year declines of nearly 10% in revenue and 28% in adjusted earnings, reflecting weaker smartphone demand, reduced orders from Apple and higher semiconductor manufacturing costs.

Qualcomm has previously provided revenue guidance of $9.7 billion to $10.5 billion and non-GAAP diluted earnings per share of $2.05 to $2.25 for the quarter.

The company expects handset revenue to reach approximately $5.2 billion in the December quarter, representing a decline of around 25% from the corresponding period last year.

Management had also indicated that the initial contribution from data-centre products could reduce Qualcomm CDMA Technologies' weighted gross margin by 1.5 to 2 percentage points.

Smartphone business faces mounting pressure

Qualcomm's handset business has experienced a deterioration in growth throughout the current financial year.

Handset chip revenue increased 3% year over year in the December quarter of fiscal 2026. However, the segment subsequently recorded a 13% decline in the March quarter, followed by a 20% contraction in the June quarter, when revenue fell to $5.1 billion.

The weakness was also evident in the company's third-quarter financial performance.

Qualcomm reported revenue of $9.95 billion for Q3 FY2026, down 4% year over year but above analysts' estimates of $9.66 billion. Non-GAAP earnings per share declined 20.2% to $2.21, marginally below the market expectation of $2.22.

Revenue from Qualcomm CDMA Technologies fell 5.4% to $8.5 billion. Within this division, handset revenue declined 19.6% to $5.09 billion.

Higher memory prices, supply constraints and increased component expenses have added to the pressure on smartphone manufacturers and semiconductor suppliers.

Apple's in-house modem strategy poses challenge

Another major concern for Qualcomm is Apple's gradual shift towards internally developed cellular modem technology.

Apple has been working to reduce its dependence on Qualcomm's modem chips by introducing its own solutions in selected iPhone models.

During its Q3 earnings conference call, Qualcomm management indicated that its share of modem supply for Apple's next-generation iPhones would be lower than previously anticipated.

The company also expects revenue from Apple-related products to decline significantly in the December quarter.

At the same time, tighter memory supplies and rising prices could affect demand from several smartphone manufacturers, further complicating Qualcomm's near-term outlook.

Qualcomm signs major 5G deal with SpaceX's Starlink Mobile

Despite challenges in its smartphone business, Qualcomm has secured a significant opportunity in the telecom infrastructure market.

The company announced a multi-year agreement with Elon Musk-led SpaceX to supply radio equipment, baseband units and software for Starlink Mobile's planned nationwide terrestrial 5G network in the US.

The equipment will be deployed across tens of thousands of macro cell sites, with installations expected to begin in 2027.

Although financial details of the agreement have not been disclosed, Qualcomm described it as its biggest 5G deal so far.

The partnership could strengthen Qualcomm's presence beyond smartphone processors and expand its role in telecom infrastructure, where it will compete with companies such as Marvell, Broadcom and Intel.