Qualcomm Stock Plunges 10% Despite Beating Q1 Estimates - Weak Guidance Spooks Investors

Qualcomm just delivered a classic Wall Street whiplash moment. Beat on earnings? Check. Beat on revenue? Check. Stock tanks 10% anyway.

The Guidance Gut-Punch

Forget the rearview mirror. The market trades on the windshield view, and Qualcomm's forecast looked foggy. Investors dumped shares en masse after management's outlook failed to meet the Street's voracious appetite for growth. It's a brutal reminder that in today's market, past performance is just a footnote if future projections don't dazzle.

Numbers Don't Lie, But Sentiment Does

The company posted solid Q1 numbers, surpassing analyst expectations on both top and bottom lines. Yet, none of that mattered. The single metric that moved the needle—and the stock price—was a disappointing forecast. It's the financial equivalent of serving a perfect appetizer and then announcing the main course is delayed indefinitely.

Tech's Forward-Looking Frenzy

This reaction underscores a fundamental shift. Tech investors aren't paying for what you did last quarter; they're funding a promise of what comes next. When that promise dims, even temporarily, the punishment is swift and severe. The market's patience has evaporated, replaced by a relentless demand for perpetual acceleration.

Another case of 'beat and raise' or die trying. Sometimes, meeting expectations just isn't enough—you have to blow them out of the water and promise to do it again next time. Welcome to the earnings guidance treadmill, where standing still feels like falling backwards.

Revenue and profit breakdown show modest year-on-year growth

On a GAAP basis, revenue still clocked in at $12.25 billion, up from $11.67 billion last year. Net income, however, slipped from $3.18 billion to $3.00 billion, showing a 6% decline. GAAP earnings per share also dropped from $2.83 to $2.78, a small dip of 2%.

The company’s operating income came in at $3.37 billion, down from $3.55 billion last year. Research and development spending ROSE from $2.23 billion to $2.45 billion, and total expenses increased to $8.89 billion. Despite the higher costs, Qualcomm still managed to beat expectations thanks to strong chip sales.

The QCT segment, which handles chip sales, reported $10.61 billion in revenue, up 5% from the year before. Within QCT, handsets brought in $7.82 billion, automotive chips earned $1.10 billion, and IoT revenue hit $1.69 billion. All three categories grew modestly, with automotive up 15%, the highest jump of the bunch.

The licensing segment, QTL, brought in $1.59 billion, up 4% year-on-year. QCT’s earnings before tax rose 2% to $3.30 billion, while QTL’s grew 6% to $1.23 billion.

Weak guidance linked to memory chip supply constraints

The real hit came from the company’s guidance for the next quarter. Qualcomm said it expects revenue between $10.2 billion and $11 billion, which is below the $11.11 billion analysts had predicted. On the earnings side, it projected $2.45 to $2.65 per share, versus the expected $2.89. This is where investors hit the panic button.

The company explained the lower outlook by saying that memory chip supply problems are hurting demand from handset customers. “Our guidance includes the estimated impact of memory supply constraints and related pricing on demand from several handset customers,” the company said in its statement.

Expected QCT revenue is between $8.8 billion and $9.4 billion, and QTL between $1.2 billion and $1.4 billion. GAAP earnings per share are expected to fall between $1.69 and $1.89, with non-GAAP at $2.45 to $2.65. Stock-based compensation is expected to knock off about $0.68, and other items another $0.08.

Balance sheet details, stock buybacks, and dividend payout

As of December 28, 2025, Qualcomm held $7.21 billion in cash, up from $5.52 billion in September.

Marketable securities totaled $4.62 billion, and inventory rose slightly to $6.67 billion. Total assets stood at $53.03 billion, up from $50.14 billion.

Total liabilities climbed to $29.96 billion, with long-term debt unchanged at $14.82 billion. Shareholders’ equity increased to $23.07 billion, from $21.21 billion in the previous quarter.

During the quarter, Qualcomm returned $3.6 billion to shareholders. That includes $949 million in dividends, equal to $0.89 per share, and $2.6 billion in stock buybacks, which covered 15 million shares.

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