Qualcomm’s stock was battered in after-hours trading Wednesday after the chip giant reported earnings that missed Wall Street’s expectations, pinning the blame on a memory market that just won’t quit bleeding. The numbers were ugly: adjusted earnings per share came in at $2.31, three cents short of the consensus, and while revenue edged up 4% to $9.8 billion, it wasn’t enough to stop the sell-off. Shares dropped 5% in extended trading, and they’re likely to open even lower Thursday.
You could hear the sighs from San Diego to Silicon Valley. Qualcomm, the kingpin of mobile processors and 5G modems, has been riding a wave of smartphone recovery and automotive wins. But the memory business—DRAM and NAND flash—is a different beast. It’s cyclical, brutal, and right now it’s in a trough. Qualcomm doesn’t make memory chips, but it buys them. A lot of them. When prices are high, they squeeze margins; when they’re low, customers delay orders. This quarter, it was the latter.
Memory Market Drag
The memory market has been in a funk for over a year. Oversupply from Korean and Taiwanese giants—Samsung, SK Hynix, Micron—has driven prices down so fast that even the biggest players are bleeding cash. Qualcomm, which bundles memory with its chips for some customers, finds itself squeezed. The company’s QCT segment, which handles chips and related products, saw operating margins shrink to 27% from 29% a year ago. CFO Akash Palkhiwala blamed “adverse mix and memory pricing” on the earnings call, a polite way of saying, “We’re getting hammered by the memory market.”
Qualcomm isn’t alone. Intel and AMD have both flagged memory headwinds in recent quarters. But for Qualcomm, the timing stinks. The company is finally seeing a smartphone recovery—handset shipments are up 3% year-over-year, the first growth in four quarters. Automotive design wins are piling up, with Qualcomm’s Snapdragon Digital Chassis now in over 30 car models. IoT sales are steady. Yet the memory cloud hangs over everything.
The Bottom-Line Miss
The revenue beat is cold comfort when the bottom line disappoints. Adjusted EPS of $2.31 missed by a penny or two, but the market doesn’t care about small margins—it’s the direction that matters. Analysts had trimmed their estimates after Qualcomm’s warning earlier in July, but the actual results still came up short. “We are seeing a slower recovery in memory pricing than anticipated,” said CEO Cristiano Amon on the call. Translation: we don’t know when this will end.
“The memory market is in a funk, and Qualcomm is getting squeezed in the middle—buying high, selling low, and watching margins evaporate.”
Amon tried to strike an optimistic note, pointing to the company’s diversification into automotive, IoT, and PCs. Qualcomm’s Snapdragon X Elite chips for laptops are gaining traction, with Dell and Lenovo launching new models. But these are long-term plays. Right now, Qualcomm is a smartphone company, and smartphones live and die by memory. Until the memory market turns, investors are stuck.
What’s Next?
Guidance for the current quarter didn’t help. Qualcomm forecast revenue between $9.6 billion and $10.4 billion, with the midpoint at $10 billion—roughly in line with analysts’ $10.1 billion expectation. But the adjusted EPS guidance of $2.20 to $2.30 fell short of the $2.35 consensus. That’s what spooked the market. When a company can’t even hit the low bar, confidence erodes.
Some analysts are already downgrading. Morgan Stanley cut its price target from $220 to $200, citing “persistent memory headwinds.” Others are holding firm, betting on a rebound in H2 2026. “Memory prices are bottoming,” wrote Bernstein’s Stacy Rasgon. “It’s just a matter of when, not if.” But for investors, “when” is a dangerous word.
The real question is whether Qualcomm can decouple from the memory cycle. It’s trying with its automotive and edge computing businesses, but those are still small relative to mobile. In fiscal 2026, handset-related revenue will still account for over 60% of total sales. As long as that’s the case, Qualcomm’s fortunes are tied to memory.
This earnings miss also reignites the debate about Qualcomm’s dependence on Apple. Yes, the Apple modem business is a long-term worry, but that’s a 2027 problem. The here and now is memory. And it’s not pretty.
The stock closed Wednesday at $187.45, down 1.2% in regular trading. The after-hours drop took it below $178. That’s a 5% haircut in hours. For a company that’s supposed to be a bellwether for tech recovery, it’s a bitter pill.
Qualcomm will survive this. The company has $13 billion in cash, strong IP, and a dominant position in 5G. But surviving isn’t thriving. Until the memory market turns, investors should buckle up for more volatility. This ride isn’t over.
