What Could Go Wrong At Qualcomm From Here?

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Qualcomm (QCOM) stock trades at 4.2 times sales, against 3.1 for the S&P 500. Its revenue fell 8.4% from a year earlier in fiscal Q4 2026, so buyers appear to be paying for growth to return. That outcome requires Qualcomm to stop the contraction in phone chip sales while expanding its car and data center chip sales fast. So what is weighing on Qualcomm’s phone business?

Qualcomm Is Selling Into A Smaller Phone Market

A memory chip shortage is currently weighing on smartphone sales, an issue Qualcomm management raised itself. During the company’s November 4, 2026 call, management cited the negative impact of memory pricing on the size of the mobile industry, alongside the loss of Apple as a customer.

Management, like industry analysts, projects that the handset market will fall by a low teens to mid teens percentage from 2025 to 2026. Its plan assumes global handset units will be flat to down in calendar 2027.

Qualcomm does not expect its phone chip sales to recover yet. Management said the June quarter was the low point for its China Android business, which grew in the September quarter. But the company forecasts phone chip revenue to fall by a mid single digit percentage in fiscal Q1 2027 from the quarter before, as Android growth is offset by the continued ramp down of Apple product revenue.

How Much Of Qualcomm Still Depends On Phones?

Phones still bring in more than half of Qualcomm’s chip revenue. Management said the segment accounted for $5.1 billion of the $9 billion generated in fiscal Q4 2026.

So far, the rest of the chip business is growing fast. Qualcomm’s chip sales outside phones, including cars, grew 36% from a year earlier. Automotive brought in $2 billion, its first quarter at that size, up 89% from a year earlier. Management forecasts that sales outside phones will be more than half of chip revenue in fiscal 2027. Those sales include data center chips, where management repeated a $5 billion revenue target for fiscal 2027.

The share price has already dropped, yet the stock is not cheap on sales. Qualcomm shares closed on November 9 at 31.1% below their highest close of the past year. At the end of September, the stock was priced at 4.5 times sales. That was higher than at 30 of the past 40 quarter ends. By the November 9 close, the multiple was down to 4.2 times sales. On earnings it looks cheaper, at 13.4 times against 21.8 for the S&P 500. But one quarter’s profit, in fiscal Q2 2026, was $7.37 billion on just $2.31 billion of operating income. That quarter was more than half of fiscal 2026’s $13.6 billion of profit, so much of the low earnings multiple comes from it.

How Worried Should Qualcomm Holders Be?

The memory shortage is a real risk for Qualcomm holders. Qualcomm’s gross margin has slipped too: it fell in each quarter of fiscal 2026, from 54.6% in the first to 50.7% in the fourth.

Management is raising prices across its products to reflect higher semiconductor input costs, and expects the full benefit in chip gross margins during the second half of fiscal 2027. The company also expects its new custom data center chips to lower gross margins, even as they add to operating margins.

If phone chip sales keep falling, more of Qualcomm’s growth must come from cars and data centers, the businesses buyers appear to be paying for. Today, management still expects phone chip sales to fall, while sales outside phones are growing fast. When the company next reports, expected in February 2027, Qualcomm’s phone chip revenue will be the number to watch.

Does This Mean You Should Act On QCOM?

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