Qualcomm Says Non-Handset Revenue Will Make Up 50% Of Chip Sales This Fiscal — Retail Sentiment Turns Bullish

• Qualcomm executive said data center chip sales would hit a $7-billion run-rate by the end of fiscal 2027.
• Qualcomm is diversifying as it faces the eventual loss of its Apple modem business, rising component costs, and weaker handset demand.
• Retail sentiment for QCOM shifted to ‘bullish’ from ‘bearish.’

Qualcomm is shedding its identity as a pure-play smartphone components vendor, its latest results on Wednesday showed. 

The chipmaker said non-handset business (Automotive, IoT, and Data Center) is scaling rapidly and will cross 50% of the total QCT revenue in fiscal 2027. QCT is Qualcomm CDMA Technologies, Qualcomm’s mainstay chipset division and primary revenue engine. 

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“Non-handset revenues will represent more than 50% of QCT revenues in the fiscal year... In data center, we're executing to the revenue targets we outlined at Investor Day, including $5 billion in fiscal '27 and $15 billion in fiscal '29,” Qualcomm CFO and COO Akash Palkhiwala said in the analyst call. 

“We expect Data Center revenues to scale throughout fiscal '27, exiting the year at a $7 billion run rate."

Qualcomm is broadening beyond its smartphone chip business as it targets growth in AI data centers, developing processors and infrastructure products for cloud customers. The move comes as the company faces the eventual loss of its Apple ​modem business, rising component costs and weaker handset demand.

Qualcomm announced a multigenerational collaboration with Amazon Web Services in September to develop custom AI data center chips and connectivity products. Amazon could purchase up to $60 billion of Qualcomm products under the long-term arrangement, it said then.

In the analyst call on Wednesday, Qualcomm executives said that the majority of the $5 billion forecast for data center segment sales was based on business from two hyperscaler customers, including Amazon, and that Qualcomm was in advanced discussions with a third potential customer.

QCOM Stock Drops As Handset Weakness Weighs

Revenue from Qualcomm's handset unit, which makes chips for smartphones and is the biggest component of the QCT segment, fell 26% to $5.14 billion in the fourth quarter, dragging QCT revenue ​down 8% to $9.02 billion. Qualcomm’s total sales fell 8% to $10.3 billion.

QCOM stock fell 10% in overnight trading as investors focused on the shrinking core handset business, even though the company forecast Q1 2027 total and QCT sales above expectations.

Qualcomm expects revenue between $10.4 billion and $11.2 billion, with a midpoint above analysts' average estimate of $10.48 billion, according to LSEG-Reuters.

It expects sales in its chip segment to be between $9 ​billion and $9.6 billion, exceeding estimates of $8.88 billion. 

Still, analysts were upbeat, particularly from the healthy visibility in the data center business. “The diversification story continues,” Patrick Moorhead, chief analyst at Moor Insights & Strategy, said in an X post. “Data center is real: $650M+ guided for December, up every quarter to a $7B+ exit, $5B FY27 reaffirmed. In July I said it would hit soon.”

In a separate post, he said: “data center is now a supply question, not a demand question. Upside beyond the $5B FY27 target is constrained by supply, and two hyperscalers at scale make up most of the $5B, both running into FY28 and FY29.”

Retail View On QCOM 

On Stocktwits, retail sentiment for QCOM fell to ‘bullish’ from ‘bearish.’

“$QCOM easy buy and hold.. they are telling you over and over that they will beat their own roadmap revenue forecasts.. and none of it is remotely built into this price still,” a trader wrote.

Another, with a contrarian view, wrote: “After ER, market outlook for AI stocks and Democrats gaining more power is a recipe for a decline.”

QCOM stock is up 3% year-to-date as of their last close.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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