Goldman Sachs: Qualcomm revenue guidance beats expectations, while margins and earnings per share face pressure

Revenue was steady. Where did profitability fall short?

Qualcomm’s gross margin for the fourth quarter of fiscal 2026 was 52.4%, below Goldman Sachs’ forecast of 53.5% and the market consensus of 53.3%. Its pretax margin was 25.5%, also below their respective forecasts of 26.2% and 26.3%.
Operating earnings per share for the quarter were 2.17 dollars, broadly in line with Goldman Sachs’ forecast of 2.16 dollars and the market consensus of 2.17 dollars. Goldman Sachs expects weak margin guidance to cause a slight decline in the share price.

Revenue at QCT, the chip business, was 9.02 billion dollars, above Goldman Sachs’ and the market consensus estimate of 8.78 billion dollars. Automotive revenue was 1.99 billion dollars, above both forecasts of approximately 1.7 billion dollars; Internet of Things revenue was 1.89 billion dollars, also above the forecast of approximately 1.8 billion dollars.
Handset revenue was 5.1 billion dollars, below Goldman Sachs’ and the market consensus estimate of 5.2 billion dollars. Strength in automotive and the Internet of Things alongside continued weakness in handsets was the main change in the quarter’s business mix.

Qualcomm’s revenue guidance for the first quarter of fiscal 2027 was 10.8 billion dollars, in line with Goldman Sachs’ forecast and above the market consensus of 10.5 billion dollars. Under the presentation used in the report’s table, the guidance still implies a year-over-year decline of 11.9%.
Earnings-per-share guidance excluding stock-based compensation was 2.25 dollars, below Goldman Sachs’ forecast of 2.41 dollars and the market consensus of 2.33 dollars. Revenue guidance was above consensus, while profit guidance was below consensus.
Goldman Sachs noted that data-center revenue will begin to ramp up in the quarter ending in December. Subsequent areas of focus include the pace of the ramp-up in fiscal 2027, visibility into a recovery in the Android smartphone market, and progress on business diversification.

Goldman Sachs rates Qualcomm Neutral, with a 12-month price target of 160 dollars, based on a normalized earnings-per-share estimate of 11.50 dollars and a price-to-earnings multiple of 14 times.
The bank sees stronger-than-expected progress in data-center CPUs and stabilization or gains in smartphone market share as potential upside factors. Greater-than-expected losses in handset market share and a slower ramp-up in automotive and Internet of Things revenue are downside factors.