Qualcomm Stock Slides on Weak Q4 Forecast, Faster Decline in Apple Business

Qualcomm (QCOM) shares slid more than 5% in pre-market trading after the company reported mixed fiscal third-quarter results and provided a fourth-quarter earnings forecast that fell short of Wall Street estimates, rattling investor confidence.

Disappointing Outlook Overshadows Results

For its fiscal fourth quarter, Qualcomm projected adjusted earnings per share (EPS) of between $2.05 and $2.25, significantly below the analyst consensus of $2.36. The company attributed the weak guidance to an ongoing supply crunch for computer components, particularly memory chips.

The downbeat forecast overshadowed a fiscal third-quarter report that was broadly in line with expectations. While revenue for the period fell 4% to $9.95 billion, it beat estimates of $9.67 billion. However, adjusted EPS came in at $2.21, just missing the consensus estimate of $2.23.

Core Mobile Business Under Pressure

Compounding investor concerns, CEO Cristiano Amon confirmed that revenue from Apple will decline more rapidly than previously anticipated. Supply constraints are expected to reduce Qualcomm's share of modem chips in the next-generation iPhone to below the previously stated 20% target.

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This weakness in the core handset market is also impacting profitability. The company reported that gross margins in its QCT (Qualcomm CDMA Technologies) segment fell below the historical range of 48–50%, a development it blamed on memory-driven weakness. Seaport analyst Jay Goldberg noted that "as Qualcomm is diversifying, it has lost focus on its core mobile market."

Automotive Growth a Bright Spot

Despite the near-term headwinds, Qualcomm highlighted strong performance in its automotive division, which posted record revenue of $1.6 billion, a 61% increase year-over-year. This prompted the company to raise its annualized automotive revenue run-rate target.

Other positive developments included two new hyperscale custom silicon wins, which are set to begin generating revenue in the December quarter, and the completed acquisition of AI software firm Modular Inc. However, these long-term growth drivers were not enough to offset the immediate concerns over the Q4 outlook and the accelerating loss of Apple's business.