What Happens To Qualcomm Stock If The New Revenue Earns Less?

Qualcomm (QCOM) is down 32% over the past three months, and the cause is not a mystery. The smartphone market has contracted as memory prices climbed, and Apple is exiting faster than the company had guided. Management has a credible plan to replace that revenue. The harder question is what the replacement earns.

Qualcomm Is Losing Apple Faster Than It Planned To

By the company’s own account, its share in the coming iPhone launch will be materially lower than the 20% it had previously estimated, and Apple product revenue is set to fall roughly 50% from the September quarter to the December quarter. Qualcomm’s own supply constraints are part of the reason. A customer exit that was always coming has been pulled forward.

The bigger exposure is the phone business Apple sits inside. QCT handset revenue was $5.1 billion in fiscal Q3 2026, against $9.9 billion of revenue for the company as a whole, so handsets still account for roughly half of what Qualcomm sells. Management sizes the earnings hit from the weaker handset market at more than $1.50 a share for fiscal 2026, with QCT Android revenue down 20% year over year.

But Qualcomm Expects To Earn Less On Its Data Center Wins

The replacement is real. Non-handset revenue growth is guided to accelerate from 24% in fiscal 2026 to more than 60% in fiscal 2027, enough by management’s account to replace all of fiscal 2026’s Apple product revenue during fiscal 2027. Automotive is the piece already delivering, at $1.6 billion in fiscal Q3 2026 and 61% year-over-year growth, with a new agreement naming Qualcomm the lead compute silicon provider for BMW’s next-generation ADAS and digital cockpit.

The data center piece is where the economics change. Two custom silicon wins for global-scale hyperscalers begin generating revenue in the December quarter, and management says that revenue carries a gross margin well below the 48% to 50% range the baseline business earns, worth a drag of 1.5% to 2% on QCT’s weighted-average gross margin. Rising input costs across wafers, packaging, and memory are creating short-term pressure that will put that line slightly below its historical range, though management expects price increases to bring the baseline business back into range over time.

So the data center ramp arrives with a margin discount attached. For a company that needs the growth, that is a defensible trade. It is still a trade.

And You Will Not Get A Warning From Revenue

Revenue over the past twelve months was $44.1 billion, up 1.9%, as quarterly year-over-year growth ran 10.0%, then 5.0%, then -3.5%, then -4.0%. Management expects the top line to grow again in fiscal 2027. What growth will not show is that the data center dollars inside it earn less than the ones they replace.

The market has already marked down the phone business. At $169.04 the stock sits at about 68% of its 52-week high, and it returned 8.7% over the past twelve months against 20.5% for the S&P 500. Whether a decline this size is a discount or a warning is worth settling before you add to it.

The gross margin at QCT is the line to watch as the December quarter’s custom silicon revenue lands. A mix change shows up there first, and it keeps showing up for years.

How Much Of Your Money Is Riding On The Swap?

The swap will not tell you, and a margin mix unwinds too slowly to give you a morning to act on. Weighing one holding against everything else you own is the job the Trefis High Quality Portfolio is built to do. That portfolio has a track record of outpacing the three major indices.