Your Qualcomm Stock Thesis Has One Loose End
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Qualcomm (QCOM) still makes most of its chip sales in smartphones. Its revenue fell 8.4% from a year earlier to $10.3 billion in the quarter that ended September 27, 2026. Management is counting on a new business, whose custom accelerators began shipping only in October, to diversify that revenue. Management has set targets for how big that business is meant to become, and the first test of them is still ahead.
Qualcomm Targets $5 Billion In Data Center Sales
Management expects the data center business to bring in $5 billion in fiscal 2027 and has set a target of $15 billion for fiscal 2029. That first-year sum equals about 12% of the $43.1 billion Qualcomm took in over the twelve months to September 27, 2026. That total was 2.6% lower than a year earlier.
Management has said custom silicon for the main AI accelerator at two hyperscaler customers makes up most of the fiscal 2027 sum. Connectivity revenue represents the next material piece. On the November 4, 2026 call for fiscal Q4 2026, analysts asked how that revenue would ramp through the year and which products sit inside it.
What Has Qualcomm Said About Its Data Center Customers?
Management has said two customers at very significant scale make up the fiscal 2027 target. These long-term relationships span several product generations and extend into fiscal 2028 and 2029. Management reiterated the target and said it has healthy order coverage, and expects data center sales to leave fiscal 2027 at a $7 billion annual run rate. It added that supply, rather than demand, would limit any sales beyond the target.
Management is not breaking down how much of the target comes from connectivity. It also expects the custom silicon work to add to operating margins in its chip business but to lower gross margins.
Qualcomm Guides Data Center Sales For Fiscal Q1 2027
Management expects data center revenue of more than $650 million for fiscal Q1 2027 as shipments to its custom silicon customers begin. This marks the first quarter Qualcomm counts data center inside its chip business. Management says the change has no impact on total company guidance.
In the same quarter, management expects handset revenue in the chip business to decline by a mid-single-digit percentage from the quarter before, as Apple product revenue keeps ramping down. Qualcomm is expected to report that quarter in February 2027. Data center revenue in that report, set against management’s guide for the quarter, is the measure to watch.
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