Qualcomm Stock Falls as Weak Q4 Forecast, Apple Revenue Decline Overshadow AI Data Center Growth

Qualcomm (NASDAQ: QCOM) shares dropped more than 4% in after-hours trading after the chipmaker issued a weaker-than-expected fiscal fourth-quarter profit forecast and warned that revenue from Apple-related products will decline faster than previously anticipated. Despite the near-term pressure, the company remains confident that its expanding AI data center and diversified chip businesses will offset the lost Apple revenue by fiscal 2027.

CEO Cristiano Amon said Qualcomm expects supply constraints to significantly reduce its share of components in Apple's next iPhone lineup, falling well below the company's earlier estimate of 20%. He added that Qualcomm will increase product prices starting September 1 to help restore historical profit margins, citing higher costs across the semiconductor supply chain.

The company is accelerating its transition away from smartphone dependence. Chief Financial Officer Akash Palkhiwala said growth from non-handset businesses is expected to fully replace Apple-related revenue by fiscal 2027. Qualcomm is targeting $5 billion in AI data center revenue by fiscal 2027 and aims to grow that figure to $15 billion by 2029.

Amon also revealed that Qualcomm has started wafer production for two custom AI chips designed for hyperscale customers, with revenue expected to begin in the December quarter. In addition, the company completed the tape-out of its first-generation high-bandwidth compute chip ahead of its planned mid-2027 launch.

For the fiscal fourth quarter, Qualcomm projected adjusted earnings of $2.05 to $2.25 per share, below Wall Street's consensus estimate of $2.36. Revenue is expected to range between $9.7 billion and $10.5 billion, compared with analysts' forecast of $10.02 billion.

Although third-quarter handset revenue declined 20% year over year to $5.09 billion, it still exceeded analyst expectations. Total third-quarter revenue slipped 4% to $9.95 billion, beating estimates of $9.67 billion, while adjusted earnings of $2.21 per share narrowly missed forecasts. Qualcomm noted that improving Android demand was offset by consumers shifting toward lower-priced premium smartphones and older devices, creating additional pressure on margins.