Qualcomm is set to report its fiscal third-quarter 2026 earnings after market close on July 29, with investors closely watching whether the semiconductor giant is nearing the end of the prolonged downturn in its handset business. Alongside smartphone demand, market attention is shifting toward Qualcomm’s expansion into artificial intelligence (AI), automotive technologies, Internet of Things (IoT), personal computing, and data center solutions.
Revenue Expected to Remain Under Pressure
Wall Street expects Qualcomm to report revenue of approximately $9.62 billion, representing a 7% year-over-year decline and marking the company’s second consecutive quarter of falling sales. Sequentially, revenue is projected to decline by about 9%, remaining within Qualcomm’s guidance range of $9.2 billion to $10.0 billion.
Profitability is also expected to soften. Analysts forecast non-GAAP net income of $2.38 billion, down roughly 22% from a year ago and from the previous quarter, while the company’s high-end guidance stands at $2.33 billion. On a GAAP basis, Qualcomm’s projected net income could fall by as much as 46% year over year, reflecting continued pressure on its core smartphone business.
Signs of Recovery in China’s Smartphone Market
One of the biggest themes for investors will be Qualcomm’s outlook for its handset business, particularly in China. The company believes revenue from its Qualcomm CDMA Technologies (QCT) handset segment has likely reached its lowest point during the current quarter and is expected to return to sequential growth in the fourth quarter.
Management attributes the recent weakness to Chinese smartphone manufacturers reducing production and working through excess inventory amid elevated memory costs. As a result, Qualcomm has been shipping significantly below end-market demand.
QCT handset revenue is expected to decline to around $4.9 billion, down approximately 23% from $6.33 billion in the same period last year. Confirmation of a recovery in the next quarter could provide a meaningful catalyst for investor sentiment.
Automotive Business Continues to Drive Growth
While smartphones remain under pressure, Qualcomm’s automotive division has emerged as one of its fastest-growing businesses. The segment generated a record $1.33 billion in revenue during the previous quarter, representing 38% annual growth, and management expects growth to accelerate to roughly 50% in the current quarter.
That outlook implies quarterly automotive revenue of nearly $1.5 billion, compared with $984 million a year earlier. The company has also expanded its automotive design-win pipeline to $65 billion and continues to target $10 billion in annual automotive revenue by fiscal 2029. Investors will be monitoring whether this momentum helps offset continued weakness in handsets and supports overall profitability.
Data Center Strategy Remains a Long-Term Opportunity
Qualcomm is also positioning itself as a future player in AI infrastructure and data centers through investments in custom silicon, server processors, and AI inference accelerators. The company has outlined an ambitious target of generating more than $15 billion in annual data center revenue by fiscal 2029.
Although the business is not expected to materially contribute to third-quarter earnings, investors will be looking for updates on customer wins, commercialization timelines, and confirmation that initial shipments to a leading hyperscale customer remain on track for late 2026. Clearer guidance on the revenue ramp through fiscal 2027 could strengthen confidence in Qualcomm’s long-term diversification strategy.
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