Qualcomm Stock Slips as Some Revenue Growth Disappoints

Qualcomm reported fiscal Q3 adjusted EPS of $2.77, beating estimates, with revenue of $10.37 billion largely in line, driven by strong automotive and IoT segment growth. Despite these results, the stock declined 4% as the core QCT segment's revenue was slightly below expectations and, more significantly, due to analyst concerns, notably from JPMorgan, that the impending loss of Apple as a major customer will constrain overall revenue growth to single digits in fiscal years 2026 and 2027, despite Qualcomm's diversification efforts.

Analysis

Qualcomm reported a solid fiscal third quarter, with revenue growing 10% year-over-year to $10.37 billion and adjusted EPS rising nearly 20% to $2.77, beating analyst consensus. Despite these strong headline figures, the market's reaction was negative, with the stock falling 4% intraday. This divergence is attributable to two primary factors: the core QCT segment revenue of $8.99 billion slightly missed expectations, and more significantly, the market is pricing in a major future headwind. As highlighted by JPMorgan analysts, the impending loss of Apple as a key modem customer is expected to constrain Qualcomm's overall revenue growth to single-digit percentages for fiscal years 2026 and 2027. While the company's diversification strategy shows promise, with both the automotive and internet of things (IoT) segments growing over 20% in the quarter, this has not been sufficient to allay investor concerns about the magnitude of the upcoming Apple revenue loss. The company's in-line guidance for the fourth quarter, with revenue projected at a midpoint of $10.7 billion, suggests near-term stability but does little to alter the cautious long-term outlook that is currently dictating investor sentiment.

Key Decisions for Investors

• Investors should weigh the company's successful diversification and strong growth in automotive and IoT against the significant, multi-year revenue headwind from the confirmed loss of Apple's modem business.
• Given the stock's negative reaction to a solid earnings report, the market is clearly focused on the post-Apple growth narrative, meaning investors should monitor the growth rate of non-handset revenues as the primary indicator of future performance.
• While near-term guidance is stable, the analysis from JPMorgan suggests a valuation overhang, meaning it may be prudent to wait for more concrete evidence that the diversification strategy can fully offset the forecasted revenue deceleration before building a significant long position.