$Qualcomm (QCOM.US)$ Qualcomm is scheduled to release its earnings report after the market close on November 5, Eastern Time. Revenue for Q4 2025 is expected to reach USD 10.74 billion, representing a year-over-year increase of 4.84%. Earnings per share are projected at USD 2.33, reflecting a year-over-year decrease of 9.92%.
The accounting standard used for the above data is US-GAAP.
As Qualcomm prepares to release its latest quarterly earnings report, market attention has already moved beyond the traditional mobile chip business. Key areas of focus include the sudden acceleration in AI server deployment, short-term benefits and long-term risks associated with Apple's collaboration, and shifts in growth momentum for non-mobile businesses. Each of these directions holds critical variables that could influence its valuation logic. Particularly, given the current low growth expectations for Qualcomm and its long-term valuation below the industry average, any better-than-expected signals in core areas from this earnings report could become a catalyst for valuation recovery.
I. AI Servers: Early Entry 'Surprises' Mask Unresolved Detailed Challenges
Last week, Qualcomm unexpectedly unveiled its AI200/AI250 rack-level inference systems, delivering what can be described as a 'surprise bombshell' to the market. Not only did this formally announce Qualcomm’s entry into the data center AI market, but it also set production timelines for 2026-2027, over a year earlier than previously anticipated. ASUS HUMAIN, the first customer, plans to deploy 200 megawatts of systems starting in 2026, suggesting promising initial momentum. However, beneath the excitement, many details remain unclear, and these 'grey areas' are precisely what investors should monitor closely.
Firstly, there is uncertainty regarding orders and ecosystem development. Currently, apart from ASUS HUMAIN, no information has been disclosed about other customers’ order volumes or specific details of ecosystem partners. Even core specifications for the AI200/AI250 remain vague. It is important to note that success in the data center AI market requires more than just hardware; ecosystem synergy and customer trust are crucial. As a late entrant, Qualcomm’s ability to rapidly expand its customer base and build a sufficiently mature ecosystem will directly determine the growth potential of this business.
Secondly, there is regulatory risk related to the acquisition of AlphaWave. This USD 2.4 billion acquisition is vital for Qualcomm’s AI business, as AlphaWave’s technology addresses gaps in areas like high-speed interconnects. However, the deal still needs to pass China’s antitrust review. Any delays or obstacles in approval could disrupt the progress of Qualcomm’s AI server business. Therefore, whether management can provide clarity on the transaction timeline—especially regarding whether it can proceed as planned by 2026—will significantly impact market confidence in this segment.
Specifically, four dimensions warrant close attention in the earnings report. First, the revenue growth timeline for 2026-2027, such as annual revenue contributions and growth trajectory. Second, the gross margin of the AI server business compared to Qualcomm’s core QCT (semiconductor business) average—is it higher or lower? This directly affects overall profitability. Third, beyond ASUS, are there new customers or trial cases, even small-scale collaborations, which would signal positive ecosystem expansion? Fourth, the maturity of the software stack, as well as total cost of ownership (TCO) compared to competitors like NVIDIA and AMD—since customers consider not only performance but also long-term investment, and Qualcomm’s cost competitiveness will influence its market position.
II. Mobile Business: Short-Term Benefits from iPhone 17 Fail to Offset Long-Term Risks from Apple’s In-House Development
The mobile business remains Qualcomm's core revenue base, and this quarter’s performance hinges on the balance between "short-term benefits" and "long-term risks." In the short term, the popularity of the iPhone 17 series is likely to deliver tangible growth for Qualcomm — reports suggest that, except for the iPhone Air, all other models use Qualcomm’s modems. With iPhone 17 sales expected to achieve double-digit year-over-year growth during the holiday season, this will positively drive Qualcomm’s mobile chip sales and licensing business.
More importantly, this growth may exceed previous expectations. Last quarter, management forecasted that mobile business revenue would grow by 5% quarter-over-quarter, primarily driven by new Android Snapdragon products, while Apple-related revenue was expected to decline sequentially. However, with the better-than-expected inventory buildup and sales of the iPhone 17, Apple-related revenue is now highly likely to achieve sequential growth, providing additional support for the mobile business.
However, behind these short-term gains, long-term risks have not disappeared — Apple continues to push forward with its in-house modem development efforts. Currently, Qualcomm’s supply agreement with Apple runs until 2026. Once Apple’s self-developed modem matures, it is likely to gradually replace Qualcomm’s solutions, capturing market share. Therefore, this quarter, beyond short-term results, investors should focus on three key issues: first, the seasonal balance between Android and Apple businesses during the holiday season, such as their respective revenue contributions and whether one segment might significantly drag down performance; second, the outlook for the smartphone market in the first half of 2026, especially whether demand from the Android camp will weaken, as this affects next year’s baseline; and third, whether Apple has updated its modem plans post-2026, as even minor technical progress or partnership changes are important signals for long-term cooperation.
3. Non-mobile business: Automotive growth shifts gears, while PC/IoT remains in the "trial-and-error phase."
The non-mobile business is a critical growth driver for Qualcomm’s future, but this quarter’s performance across different segments shows clear divergence. On one hand, automotive business growth has transitioned from high-speed expansion to stabilization; on the other, PC and IoT businesses remain exploratory, testing management’s operational capabilities.
First, let’s examine the automotive business. Last quarter, automotive revenue grew 21% year-over-year, setting a new record. However, compared to previous rapid growth, the pace has indeed slowed — reflecting a shift in business dynamics from clearing backlogged orders to normalized steady growth. For investors, the focus should not be on how much growth has slowed, but rather on two key points: first, the revenue trajectory for 2026, such as quarterly growth projections and whether significant orders will materialize; and second, the status of design wins, as there is a cycle from winning designs to actual delivery, and current wins directly impact revenue over the next 1-2 years. If design wins exceed expectations, this would be a positive signal for long-term growth.
Next, let’s look at the PC and IoT businesses. In the PC segment, the strategic importance of the Snapdragon X series remains undiminished, but the direction of market demand is somewhat skewed — enterprise purchases are more focused on phasing out Windows 10 and updating devices, rather than being driven by AI-related replacement needs. Additionally, the Arm-based PC ecosystem is still rapidly evolving, with software compatibility and OEM partnerships yet to reach maturity, making Qualcomm’s progress in the PC space more challenging than anticipated.
The IoT business faces similar challenges, particularly in the consumer computing sub-sector, which is under significant growth pressure due to weak PC demand. While industrial and networking segments remain relatively stable, they have yet to form a strong enough growth engine. Nevertheless, management maintained its projection last quarter for non-mobile business revenue to reach $22 billion by fiscal year 2029, signaling confidence in the long-term direction. Key areas to watch in the earnings report include: actual PC sales, breakthroughs in software compatibility (e.g., more mainstream software adapting to Snapdragon X), whether OEM partnerships are expanding, performance across IoT sub-markets, particularly whether industrial/networking can offset weakness in consumer computing, and whether there are measures to safeguard gross margins for these businesses — after all, profitability must not lag if the non-mobile business is to contribute to long-term growth.
Overall, this quarter’s Qualcomm earnings report is packed with key highlights: details on AI servers, the balance between short- and long-term prospects for the mobile business, and the quality of growth in non-mobile businesses — each could become a critical factor influencing valuation. Especially noteworthy is Qualcomm’s AI strategy: if management provides a clear roadmap and reports better-than-expected customer/ecosystem progress, it could dispel the market’s stereotype of “sluggish growth” and serve as a pivotal catalyst for valuation recovery.
Options Signals
Before the earnings report, the put/call ratio increased while trading volume declined, indicating a potential retreat of bullish positions.
Based on options signals, the expected share price fluctuation after the earnings report is ±5.91%.
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