Photo: Coolcaesar at en.wikipedia / Wikimedia Commons / CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0) The chipmaker beat Q1 estimates but guided well below Wall Street expectations for next quarter, sending shares down 11% after hours
Qualcomm just delivered a classic earnings plot twist: beat the quarter, tank on the guidance. The chipmaker posted fiscal Q1 2026 results that topped Wall Street estimates, then immediately followed up with a profit forecast weak enough to send shares tumbling as much as 11% in after-hours trading.
The numbers tell two very different stories #
Qualcomm’s fiscal Q1 2026 looked solid on paper. Adjusted earnings per share came in at $3.50, beating the $3.41 consensus. Revenue hit $12.25 billion against expectations of $12.21 billion.
For Q2 fiscal 2026, Qualcomm guided revenue between $10.2 billion and $11 billion. Wall Street had been expecting $11.11 billion. The adjusted EPS forecast of $2.45 to $2.65 landed even further below the $2.89 consensus.
AI is eating everyone’s lunch, including smartphones #
Qualcomm CEO Cristiano Amon pointed directly at surging demand from AI data centers as the primary driver. The massive buildout of AI infrastructure requires enormous quantities of memory chips, and that demand has essentially redirected critical memory supplies away from the smartphone sector.
The impact has been particularly acute among smaller Chinese smartphone manufacturers, who lack the purchasing power and supply chain leverage of giants like Apple or Samsung. Reduced production and lower inventory levels among these OEMs translate directly into fewer Qualcomm chips being shipped.
Qualcomm has announced plans for double-digit price increases effective September 1, 2026, specifically tied to rising memory costs.
What this means for investors and the broader tech ecosystem #
The revision suggests the memory shortage could persist through a significant portion of fiscal 2026. Qualcomm has been working to diversify beyond smartphones into automotive, IoT, and PC chips, but the handset business remains its bread and butter, and a prolonged shortage in that segment creates real revenue headwinds that diversification alone can’t offset in the near term.
The planned double-digit price hikes starting in September 2026 deserve particular scrutiny. Higher component costs tend to compress margins across the supply chain. If smartphone prices rise meaningfully, it could dampen unit sales growth in emerging markets.
Traders should watch two things closely in the coming quarters: whether the memory shortage shows signs of easing as new fabrication capacity comes online, and whether Qualcomm’s price increases stick or get negotiated down by large OEMs with leverage.
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