---
title: "QCOM: Memory Crunch Deepens; Smartphone Stocks at Risk?"
description: "QCOM reported FY2026 Q1 results (quarter ended Dec 2025) in after-hours trading on Feb 5 (Beijing time). Key takeaways: 1) Core metrics.Revenue was $12.25bn, up 5% YoY, in line with market expectation"
type: "topic"
locale: "en"
url: "https://longbridge.com/en/topics/38476249.md"
published_at: "2026-02-05T01:16:45.000Z"
author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)"
comments_count: 2
---

# QCOM: Memory Crunch Deepens; Smartphone Stocks at Risk?

Qualcomm (QCOM) released its Q1 FY2026 results (quarter ended Dec 2025) after the U.S. market close on Feb 5 Beijing time. Key takeaways:

**1) Headline numbers**: **Revenue was $12.25bn, +5% YoY**, in line with consensus ($12.2bn). Growth decelerated again, mainly due to a sluggish downstream smartphone market. **GPM was 54.6%, down 120bps YoY and below consensus (55.2%)**, pressured by memory tightness that weighed on QCT margins.

**2) Segment mix**: $Qualcomm(QCOM.US) operates two major businesses: QCT (semis) and QTL (licensing). QCT remains the primary driver, contributing close to 90% of revenue.

**Within QCT:** ① **Handsets revenue was $7.8bn, +3.3% YoY**. Growth slowed materially, caused by: **soft industry shipments growing only low single digits; and flagship launches pulled forward to last quarter, front-loading demand**.

**② Auto revenue was $1.1bn, +14.6% YoY**, driven by Snapdragon Digital Cockpit shipments. **③ IoT revenue was $1.69bn, +9% YoY**, supported by consumer, networking, and industrial demand. Growth cooled from prior 20%+ YoY as China state subsidies tightened.

**3) Opex**: **Operating expenses rose to ~$3.32bn**. R&D increased to ~$2.45bn, while S&M was ~$870mn for the quarter.

With lower GPM and higher opex, core OP was $3.37bn, down 5% YoY.

**4) Next-quarter outlook**: **Q2 FY2026 revenue guidance of $10.2–11.0bn, below consensus ($11.2bn)**. **Non-GAAP EPS guided to $2.45–2.65, also below consensus ($2.90)**.

**Dolphin Research view: Memory shortages keep the core under pressure.**

Top-line met expectations, while **GPM fell primarily due to memory shortages/price hikes, which dragged QCT margins**. Given the known constraints from memory and tighter state subsidies, segment prints were largely in line. **The real disappointment lies in the next-quarter guide**.

For next quarter, Qualcomm guides revenue to $10.2–11.0bn, **below consensus ($11.2bn)**. Non-GAAP EPS is $2.45–2.65, **also below consensus ($2.90)**. **This implies declines in both revenue and margins QoQ**.

The main drag is handsets. Management expects **handsets revenue of only about $6.0bn next quarter, a double-digit YoY decline, citing DRAM supply shortages**. Street had already trimmed estimates, but the magnitude of memory constraints appears worse than anticipated.

Beyond the print, the market focuses on several areas:

**a) Legacy core: still under pressure**

Handsets remain the largest business, accounting for over half of revenue. **Global smartphone shipments were 363mn units this quarter, up just 1.4% YoY**.

**With Apple and Android as the two camps, Apple shipments rose 5.7% YoY while Android saw no growth**, weighing on Qualcomm’s handset performance. Handsets and IoT face headwinds from memory shortages and tighter state subsidies. **Guidance suggests memory tightness will be worse than expected**.

**Management guides handset revenue to about $6.0bn next quarter, ~13% YoY down**. This means the memory issue has moved beyond margin erosion to outright supply constraints, directly impacting shipments and revenue (shortage → stocking/shipment bottlenecks → revenue decline). The escalation of the 'memory shortage' will keep the core under pressure.

**b) AI: AI PC and data center as potential growth vectors**

AI initiatives provide optionality near term rather than immediate earnings impact.

**① AI PC (vs. Intel): Qualcomm launched its 2nd-gen PC platform, Snapdragon X2** (Elite Extreme, Elite, Plus). The **Hexagon NPU reaches 80 TOPS** (vs. 45 in prior gen) and supports on-device 13B-parameter LLMs.

With Windows on Arm maturing, Qualcomm has partnered with Microsoft, Dell, and Lenovo to break x86’s dominance and enter mainstream price bands. **Penetration remains low, however, and poses limited threat to Intel and AMD at this stage**.

**② AI data center (vs. NVIDIA)**: **In late Oct 2025, Qualcomm announced two new AI chips — AI200 (mass production in 2026) and AI250 (2027)**, marking a strategic push into data centers.

**From disclosed info**: **1) AI200 is a rack-scale solution focused on high memory capacity and lower TCO**, optimized for **LLM/multimodal inference**. **2) AI250 adopts a near-memory compute architecture**, offering 10x+ effective memory bandwidth and lower power, again targeting **memory-intensive inference**.

Qualcomm named Saudi AI startup Humain as its first customer and plans to **deploy 200MW of capacity on AI200 starting 2026 (Dolphin Research estimates ~$3bn revenue opportunity)**.

**At the current market cap of $158.3bn, Qualcomm trades at ~17x FY2026 core after-tax OP** (assumes +0.4% YoY revenue, 54% GPM, 13.7% tax rate). Historically, the stock has traded mostly in the 10x–20x PE range, placing it slightly above the midpoint now.

**Overall, with memory issues escalating from price hikes to outright shortages, the core earnings base is unlikely to improve**. **Previously, the Street expected memory inflation to dampen demand but not to cause double-digit declines in 2026 handsets, and many had already cut PTs**.

**At this stage, only breakthroughs in AI PC or data centers may restore confidence**. Management’s guide points to greater-than-expected pressure, with memory not only hitting margins but also constraining supply and shipments. **Persistent shortages will likely drive another reset lower in both earnings and valuation expectations**.

Below are the detailed takeaways from Qualcomm’s report:

**I. Overall results: growth clearly slowed**

**1.1 Revenue**

**Q1 FY2026 (25Q4) revenue was $12.25bn, +5% YoY**, in line with consensus ($12.2bn). While all segments grew, **QCT’s growth slowed notably due to memory shortages and tighter state subsidies**.

**1.2 Gross profit**

**Gross profit was $6.68bn, +2.7% YoY**. **GPM was 54.6%, down 120bps YoY and below consensus (55.2%)**, mainly on QCT margin pressure from higher memory costs.

**Inventory stood at $6.67bn in Q1 FY2026 (25Q4), +6% YoY**.

Based on guidance, **Dolphin Research believes end-demand in handsets and adjacent markets remains soft, limiting restocking incentives**. With memory shortages, inventory is likely skewed, with memory components in short supply.

**1.3 Opex and profit**

**Opex was $3.32bn in Q1 FY2026 (25Q4), +12.4% YoY**.

① R&D was $2.45bn, +10% YoY, remaining the largest spend. **②** SG&A was $865mn, +19.6% YoY.

**Core OP better reflects underlying performance given tax adjustments**. Core OP was $3.37bn (-5% YoY) with a 27.5% margin, pressured by lower GPM and higher opex.

**II. Segment details: memory shortages to drive double-digit handset decline**

By segment, **QCT (CDMA technologies) remained the largest contributor at 87% of revenue**, covering most semiconductor sales. The remaining ~13% came from QTL (licensing).

QCT remains the most important business; details below:

**2.1 Handsets**

**Handsets revenue in Q1 FY2026 (25Q4) was $7.82bn, +3.3% YoY**, in line with expectations ($7.75bn). **Dolphin Research attributes the slowdown to**: ① the flagship Snapdragon 8 Elite Gen5 was launched a quarter earlier; ② a generally weak handset market.

Industry data show that, with Apple’s spec bump at same price, **ex-Apple smartphone shipments were 255mn units in 4Q25, roughly flat YoY**, underscoring Android weakness.

**More concerning than the quarter is next quarter’s handset guide at $6.0bn**, implying a double-digit decline.

**Management cited memory shortages**. Previously, the Street mainly expected memory inflation to raise costs and indirectly soften demand. Guidance now implies a shift from price pressure to physical shortages, constraining stocking and shipments and putting significant pressure on handsets.

**2.2 Auto**

**Auto revenue in Q1 FY2026 (25Q4) was $1.1bn, +14.6% YoY**, in line with consensus ($1.08bn), driven by Snapdragon Digital Chassis shipments.

Qualcomm signed a long-term deal with Volkswagen, and leaders such as Toyota and Hyundai will adopt its solutions. **Management expects >35% YoY growth next quarter in Auto, though it remains ~10% of revenue**.

**2.3 IoT**

**IoT revenue in Q1 FY2026 (25Q4) was $1.69bn, +9% YoY**, in line with consensus ($1.7bn). After prior double-digit growth, IoT has slowed to single digits.

IoT includes consumer electronics, edge networking, and industrial products. This quarter’s growth was driven by demand across consumer, networking, and industrial.

**Beyond the core, the market also tracks AI PC and data centers:**

**① AI PC**: currently included in IoT given the small base. Qualcomm introduced Snapdragon X2 in 2H last year, lifting on-device AI to 80 TOPS (from 45).

**Management hopes AI PC becomes a new growth driver**, but share is still small and not yet a real competitive threat to Intel and AMD.

**② Data centers**: Qualcomm announced its entry into the segment; Dolphin Research expects the revenue to be booked under IoT or disclosed separately.

**No volume shipments yet**. The previously announced Humain deployment of 200MW on AI200 could bring roughly $3bn in revenue opportunity.

<End>

Related Qualcomm research by Dolphin Research

**Earnings season**

Nov 6, 2025 call Trans: [Qualcomm (Trans): AI chip details and benchmarks to be announced early next year](https://longportapp.cn/en/topics/36056666)

Nov 6, 2025 First Take: [Qualcomm: Shedding the 'handset stock' label, is AI compute the new hope?](https://longportapp.cn/en/topics/36052139)

Jul 31, 2025 call Trans: [Qualcomm (Trans): Auto and IoT opportunities far exceed Apple-related revenue](https://longportapp.cn/zh-CN/topics/32443082)

Jul 31, 2025 First Take: [Qualcomm: Hidden handset risks, when can AI turn promises into profits?](https://longportapp.cn/en/topics/32441078)

May 1, 2025 call Trans: [Qualcomm (Trans): iPhone share to drop to 70% in this year’s new models](https://longportapp.cn/en/topics/29278531)

May 1, 2025 First Take: [Qualcomm: Samsung’s rebound lacks stamina, Apple’s strategy adds uncertainty](https://longportapp.cn/en/topics/29276739)

Feb 6, 2025 call Trans: [Qualcomm: Non-handset revenue to reach $22bn by 2029 (1QFY25 call)](https://longportapp.cn/en/topics/27011427)

Feb 6, 2025 First Take: [A heating-up Qualcomm: will Apple’s baseband disrupt the story?](https://longportapp.cn/en/topics/27001484)

**Risk disclosure and statement:** [**Dolphin Research disclaimer and general disclosure**](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

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## Comments (2)

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**Star Bright** · 

👍

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**kenc** · 

好

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> **Disclaimer**: This article is for reference only and does not constitute any investment advice.