Qualcomm’s Q3 Earnings Report: A Buying Opportunity for Long-Term Investors
Qualcomm (QCOM) is set to report its third-quarter fiscal 2026 results on July 29, and the recent weakness in QCOM stock presents an attractive buying opportunity for long-term investors ahead of earnings. Shares have fallen nearly 36% from their recent high as valuation concerns and challenges in the consumer handsets market have weighed on sentiment.
One of the primary reasons behind the decline is the solid rally that pushed Qualcomm’s valuation higher. At the same time, strong demand for AI infrastructure and high-bandwidth memory has tightened memory supply and increased component costs for smartphone manufacturers. In response, several Android OEMs, particularly in China, have reduced production plans and focused on clearing existing inventory instead of placing new orders.
The decline in demand from Chinese OEMs has been particularly pronounced, with Android shipments remaining well below underlying consumer handset demand. This reflects the inventory correction underway across the Chinese smartphone market. However, management expects this weakness to bottom during the fiscal third quarter, with revenue from Chinese Android customers returning to sequential growth in the following quarter.
A Diversified Growth Story
Qualcomm’s long-term growth story extends well beyond smartphones. The company continues to diversify into automotive, IoT, and data center markets that offer substantially larger long-term growth opportunities. As these businesses scale, Qualcomm should become less dependent on smartphone cycles while benefiting from higher-value AI workloads across connected devices.
Qualcomm’s focus on diversification will support its top line, with the QCT IoT business projected to deliver year-over-year growth, led by healthy demand across industrial and consumer applications. Meanwhile, Qualcomm’s automotive business continues to outperform, with management expecting automotive revenue to grow by approximately 50% year-over-year in the third fiscal quarter.
The company’s diversification strategy strengthens its long-term investment case, with significant opportunities in agentic AI, intelligent edge devices, autonomous driving, industrial AI, and 6G. Backed by these growth initiatives, management expects adjusted earnings per share to exceed $18 by fiscal 2029.
Lower China Shipments to Hurt Qualcomm’s Growth in Q3
Qualcomm is expected to report weaker third-quarter results, as lower QCT shipments to Chinese customers will continue to weigh on results. Nonetheless, Qualcomm’s Q3 could continue to benefit from the expansion of its automotive and IoT businesses.
Management has guided third-quarter revenue to $9.2 billion to $10.0 billion, representing both sequential and year-over-year declines. Qualcomm generated $10.6 billion in revenue during the second quarter of the current fiscal year and $10.4 billion in the same quarter last year.
Qualcomm’s QCT segment is expected to generate revenue of $7.9 billion to $8.5 billion. Within QCT, handset revenue is projected to be approximately $4.9 billion, down sharply from $6.3 billion a year ago. The decline primarily reflects lower shipments to Chinese OEMs. Further, the business faces tough year-over-year comparisons, with the QCT handset business benefiting from exceptionally strong demand for premium smartphones powered by Qualcomm’s Snapdragon 8 Elite platform in the prior year quarter.
Qualcomm’s Technology Licensing (QTL) business is expected to generate revenue between $1.15 billion and $1.35 billion, with the forecast implying modest year-over-year growth.
With revenue under pressure, Qualcomm expects adjusted earnings per share to range between $2.10 and $2.30, down from $2.77 in the prior-year quarter.
Wall Street analysts are even more cautious, with consensus estimates calling for earnings of $1.54 per share, well below last year’s level.
