QCOM Stock | QUALCOMM Incorporated Q2 2026 Earnings Call

Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm second quarter fiscal 2026 earnings conference call. At this time, all participants are in listen-only mode. Later, we'll conduct a question and answer session. If you'd like to ask a question during this time, press star, then the number one on your telephone keypad. To withdraw your question, press star, then the number two. If you're using a speaker phone, please pick up your handset before pressing the numbers. Please limit your questions to one question and one follow-up. As a reminder, this conference is being recorded April 29th, 2026. The playback number for today's call is 877-660-6853. International callers, please dial 201-612-7415. The playback reservation number is 13759-551. I would now like to turn the call over to Brett Simpson, senior vice president of investor relations. Mr. Simpson, please go ahead.

Thank you and good afternoon everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question and answer session. You can access our earnings release and a slide presentation that accompany this call on our investor relations website. In addition, this call is being webcast on qualcomm.com and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements including projections and estimates of future events, business or industry trends, or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-Q, which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now to comments from Qualcomm's president and chief executive officer, Cristiano Amon.

Thank you, Brett, and good afternoon, everyone. Thanks for joining us today. In fiscal Q2, we delivered revenues of $10.6 billion and non-GAAP earnings per share of $2.65, with EPS coming in at the high end of our guidance. QCT revenues were $9.1 billion with another quarter of record automotive revenues as well as growth in IoT. Licensing business revenues were $1.4 billion. Before I share key highlights from the business, I would like to provide some perspective on Qualcomm's current customer design cycles and the opportunities ahead. We are in a period of profound change and it may not yet seem obvious to the financial community. The emergence of agent AI workloads with Open Claw as an early example are fundamentally changing user experiences across connected edge devices and reshaping our roadmap in every platform we develop. For agents to work efficiently, they must run continuously in the background, fuse sensor data into context, orchestrate multi-step tasks reliably, and deliver strong security. Today's installed base devices were not built for these new capabilities and it represents a significant upgrade opportunity and expansion of our addressable market in the coming years. Agent orchestration is predominantly CPU-bound and Qualcomm has the world's best performing CPU across smartphones, PCs, auto, and soon the data center. Qualcomm's unparalleled connectivity solutions and power efficient NPU for local models will also be key assets to delivering agentic AI experiences. No other semiconductor company matches the breadth and scale of our technology and product portfolio which powers devices spanning milliwatts to kilowatts from smart wearables to data centers. As a result, we're seeing a step function increase in strategic customer engagement and it's changing how we think about the broad AI opportunity as well as the speed of our diversification efforts. Beginning with automotive, in Q2 we exceeded $5 billion in annualized revenues for the first time and we expect to exit fiscal '26 at a run rate above $6 billion. This growth is driven by our fourth generation Snapdragon Digital Chassis platform which comprises connectivity, telematics, infotainment, as well as advanced driver assistance and automated driving. Notably, we have now enabled more than 1 million cars operating ADAS and autonomy on our Snapdragon Ride processors. By the end of the fiscal year, we will begin commercial shipments of our fifth generation Snapdragon Digital Chassis platform. This represents the largest generation-to-generation content increase in Qualcomm's history, delivering three times higher CPU throughput, a three-fold increase in GPU capability, and 12 times higher NPU performance while supporting in-vehicle agents and processing for level three and level four autonomous driving. Looking ahead to fiscal '27, we expect continued share gains and increased content, particularly in ADAS. We're pleased with the performance of our automated driving stack with BMW, and we're seeing broad customer engagement from other leading automakers. Our recent announcements with Bosch and Wave are good examples of what's to come as we build on our proven platforms and self-driving stack and scale ADAS. In IoT, agentic workloads and edge AI are driving major product renewal design cycles. Overall, our pipeline is healthy and there is clear momentum for Qualcomm solutions. In personal AI, we expect a significant increase in the choice of new smart glasses starting in the second half of the year. We believe these launches combined with the rapid progress in agentic AI will catalyze an inflection point in customer demand across this category. Our 2026 Snapdragon X2 PC platforms are currently in production and our world-class Orion CPU unlocks powerful always-on agent experiences, making it a true competitive differentiator. Agentic orchestrators such as Open Claw, Claw Desktop, Claw Code, OpenAI Codex Desktop, Perplexity Computer, Crew AI, AirMES Agent, LangGraph, and Humane One running on Snapdragon X2 are early proof points. A recent PC Mag review of the Asus Zenbook A16 notes that Qualcomm is now a serious challenger in the PC space and states, quote, 'The generational leap from the original Snapdragon X Elite to the X2 series is particularly striking. Qualcomm hasn't just caught up to the industry, in some cases it's now helping to set the pace,' unquote. In addition, our Hexagon NPU is the world's fastest for laptops, delivering up to 85 TOPS. Together with our industry-leading CPU, which has the best on-device token generation rate, Snapdragon X2 delivers the full agent experience end to end and outperforms Intel's Panther Lake by nearly 30%. In physical and industrial AI, our new Dragonwing IQ10 platform has generated substantial customer interest since our launch at CES. This is a significant upgrade compared to IQ9, featuring an NPU with up to 700 TOPS of on-device AI performance, an 18-core Orion CPU, over 20 camera sensors, and an integrated safety island. Building on our design win with Figure AI, we announced an exciting multi-year agreement with Nura, reinforcing our confidence that we can become a significant player in the broad robotics market. Also during the quarter, we introduced Ventuno Q at Embedded World. This is the second Arduino platform built on Qualcomm silicon, and we view it as a world-class prototyping engine for both robotics and industrial AI developers. As we expand our ecosystem across key verticals, Ventuno Q is purpose-built to bring AI into the physical world, enabling fully autonomous AI agents in a wide range of edge AI applications, including voice assistants and vision systems. Several new industrial AI products are also moving from design win to deployment across retail, utilities, oil and gas, agriculture, and other verticals. In data center, the Alpha Wave integration is off to a great start and we're pursuing multiple opportunities with large hyperscalers, cloud service providers, sovereign AI projects, and other global partners. Building on that momentum, we're also entering the custom silicon space, beginning our ramp with a leading hyperscaler, and we expect initial shipments in the December quarter. In addition, development of our leading data center CPU and high performance AI inference accelerators is progressing well. We look forward to sharing more details and customer wins at Investor Day in June. Regarding handsets, I would like to underscore two key points. First, the quarter played out as we expected. Sell-through held up and our chip business materially under-shipped consumer demand. We believe our China Android revenue is bottoming out and fiscal Q3, and Akash will provide more specifics in his financial update. Second, we think agent smartphones will soon begin to influence the premium tier and we expect this trend will only get stronger into fiscal '27 with examples like the Nubia DAO Bow powered agent AI phone from ZTE Nubia, Xiaomi's recent announcement of a MiClaw agent framework, and other agent assistants now in development across the Android ecosystem. We have a clear line of sight into how the AI upgrade cycle will unfold and this is going to be an important tailwind for premium demand over time. Next, I want to highlight a major strategic initiative and long-term growth driver for Qualcomm: 6G, the next generation of wireless design for the age of AI. We believe 6G will present one of the most significant transitions for the wireless industry. From a connectivity perspective, 6G will enable new classes of mobile and personal devices such as smart glasses with enhanced uplink capabilities to support agentic use cases like 'see what I see.' Beyond connectivity, 6G will be an AI-native network where AI reasoning, learning, and autonomous action are core functions. It is intended to act as distributed intelligent infrastructure that integrates communication with wide area real-time sensing. With these new capabilities, the network becomes critical infrastructure and provides the telecom industry an opportunity to develop completely new business and economic models. It will make possible new AI-enabled services ranging from context-relevant data, data insights and analytics, low-altitude aerial, terrestrial and autonomous traffic management, drone detection and tracking, and 3D mapping with telemetry to build dynamic digital twins at scale. Qualcomm's leadership in connectivity, AI processing, and high performance low power computing positions us to be one of the key architects and beneficiaries of the 6G transition. In addition to the development of foundational technologies and standards, we're building end-to-end solutions for devices and the network from agentic modems and compute platforms that power phones, PCs, intelligent wearables, and cars all the way to the network including power efficient next generation radio units, wide area network sensing platforms, and high performance compute and AI accelerators for the RAN, network edge, core, and data center. To help shape and accelerate the 6G roadmap at MWC, we launched a 60-company coalition spanning carriers, cloud infrastructure, AI-native partners, and auto OEMs. The engagement and feedback on our 6G vision and plans from our partners, customers, and governments across the globe has been very positive, and we look forward to working across the industry to deliver on this generational opportunity. Before I turn the call over to Akash, I want to note that we will provide a broader update at our Investor Day to include our data center plans and our progress in other areas including advanced robotics, next generation ADAS, industrial edge AI, personal AI devices, and 6G. We hope you can join us as we will be highlighting meaningful new avenues of growth to support our long-term diversification story. I will now turn the call to Akash.

Thank you, Akash. Operator, we are now ready for questions.

Thank you. To queue a question, press star then the number one. To withdraw your question, press star then number two. If using a speaker phone, please pick up your handset before pressing the numbers. One moment please for the first question. Our first question comes from the line of Joshua Buchalter with TD Cowen. Please proceed with your questions.

Hey guys, thank you for taking my question. I obviously not sure you're going to be able to front-run the AI day you plan to host in June. But any details you're able to share on or context on what the custom silicon engagement, you know, what the scope is, what the magnitude is, is this a CPU? Is it an accelerator? Is it a networking chip? Just, you know, any help you can give us beyond the press release and prepared remarks, I think would be helpful as that's where investors certainly want to dig in today. Thank you.

Josh, this is Cristiano. Thanks a lot for your question. Look, I can't provide a lot of details. As you said, we don't want to front-run. I think June 24, but here's a couple things I can tell you which is alongside what we said in the script. I think we have spent that time building assets and we've been building our CPU, we have our accelerator, we have a different solution for memory in the accelerator, we have added a lot of capabilities for custom ASIC with the acquisition of Alpha Wave, and connectivity. We have been pursuing custom ASIC, we talked about having an engagement with a number of companies and pleased with the engagement several quarters ago. And I think given the capabilities that we're developing and what's happening in the market, that's accelerating. So we're very excited. The only thing I can tell you is it is a large hyperscaler and we're really thinking about a multi-generation engagement, but I think that's all we can say at this point.

Okay. I guess we'll stay tuned. For my follow-up, can you maybe walk through why you're confident that I assume it's fiscal third quarter that you were referring to with the third quarter, but why you're confident fiscal third quarter can be the bottom for Android sales, Android QCT sales into China? I mean, that's typically a down seasonal quarter. And just given how low visibility is right now overall in the handset market, I'd be curious just what inputs you're seeing that gives you the confidence it's going to bottom in the June quarter. Thank you.

Hey Josh, Cristiano just want to add one thing because there's another way to look into this. As you know, because of our licensing business, we do have visibility of what happens in the market. So we know sell-through, we know how the cell phone market is behaving even when there's price increases on the handsets. So it gives us a real good idea on activations and customer demand versus what we're shipping. So that dynamic outlined by Akash is kind of very clear to us that Q3 becomes the bottom.

Our next question comes from the line of Samik Chatterjee with JP Morgan. Please proceed with your questions.

Hi, thank you. Thanks for taking my questions. Cristiano, maybe just going back to the data center opportunity and just trying to think about if you can sort of help us think about the competitive landscape here. I mean, you've had ARM which is the IP provider now announced they want to vertically integrate and make chips. You had Nvidia announced that they are going to focus on the inferencing market as well. How you're thinking about the competitive dynamics where they are relative to maybe three months ago or six months ago that you're now sort of going and trying to deliver these wins on? And I have a quick follow-up after that. Thank you.

Great question. Look, I'll give our perspective and I think we have now more clarity than we ever have about where we are in the AI space. So a little bit at a very high level, right? In the beginning it was all about training, it was all about creation of AI, a lot of GPU, very GPU-centric deployment. Inference started to gain scale and then the conversation changed to 'I'm going to use my GPU from training on the cluster that I build and when I'm not training, I'm going to use that for inference.' As inference starts to gain scale, you started to see dedicated solutions. The data center becomes more disaggregated. You separate computing solutions, some for compute-bound, some for memory-bound. And now we're entering the next phase, which is how AI is really going from inference generating tokens, how do you generate demand for tokens which are all those agentic experiences and those orchestrators that run into a lot of the devices. So when you look at that landscape and you look at our IP and the places that we can be very differentiated, I will start by our CPU. I think when you think about agent, CPU becomes very important and I will argue we are one of the companies that have a pretty good CPU asset. We've proven that CPU performance with leading performance in the markets that we are right now such as PC, smartphone, and auto, and we have built and we'll provide details on Investor Day a dedicated CPU for agentic experiences in the data center. We're going to show the metrics. We're going to show how it performs. People will be able to compare. As you know, we have an architecture license and we have a very high performance CPU. So that's one of the assets. The other asset is how you think about the scale of a semiconductor company like Qualcomm. We're not small. And the ability to combine the IP with the ability to do custom silicon, make sure that that yields, make sure it's delivered with quality, and combine a lot of the connectivity IP, which I believe Alpha Wave because it was a licensing IP company has a leading IP. The more you license, the better your IP becomes. Number three is how we think about the accelerator. You're going to need high compute density, low TCO, and we think that we have something unique which is focus on a cluster that is disaggregating for very specific functions, especially like decode. I think the activity you've seen with companies like Groq and Cerebras just proves that you have opportunities for a dedicated inference accelerator. And the last point is I would not discount the position that we have on the edge. If you actually track what's happening with Open Claw and all of the different desktop and code work solutions, you rely a lot on a high performance CPU device which is also causing an upgrade cycle for us. So we look at this whole landscape and that's how we feel so good about the agentic transition of AI, what it means to Qualcomm, and hopefully on June 24 we'll show the details on the roadmap and investors will be able to see where we stand. Please reserve a seat.

Yeah, no, please, look forward to talking about that more at the Investor Day. Maybe for my follow-up, just going back to the handset business, can you just remind us of the multi-year agreement framework that you have with your primary premium smartphone customer Samsung? You did have some sort of changes in the market in the share with them this year. I think there's some more indications of a further step down in share and more use of the in-house SoC sort of next year. Or can you just remind us sort of how you're thinking about that engagement long term and what does the multi-year agreement sort of capture at this point?

No, absolutely. I love answering this question. So, this is a very, very stable relationship with Qualcomm. I want to remind you all that we have reset the framework of this relationship. Historically, we always had a business with Samsung that was in the 50% share between us and their own in-house silicon. That has changed to greater than 70% as you know and that has been the framework and sometimes we get more than that but we plan our business at greater than 70% share, which is exactly what we have said. You should expect that that is the framework of this year and that is also the framework for next year. I would say that that's probably one of the most stable relationships that we have and we have visibility of what that entails and we feel good about the position on Snapdragon and I'll argue, I think given what's happened with agents, we have an opportunity to actually have a positive bias on their share.

Our next question is from the line of Chris Caso with Wolfe Research. Please proceed with your questions.

Yes. Hi. Good evening. I guess the first question if just returning to the data center briefly and to clarify what you mentioned in terms of the hyperscaler engagement for the December quarter. Is that an engagement for an accelerator or a CPU? I understand you're targeting both it sounds like. But what's the particular engagement for December?

This particular engagement which we're going to have shipments in December is a custom product we're working with a hyperscaler.

Okay. So no other specificity past that. Okay. Just with regard to QTL and it looks like that's modestly down and likely due to what you've been talking about with regard to what's going on in the handset market. What's the right way to think about the QTL business as we go forward into the second half of the year? Do you think that we kind of maintain these levels and adjust for seasonality as you get to the end of the year or do you expect the impact on QTL to be more significant as you go in the second half?

The next questions are from the line of Stacy Rasgon with Bernstein Research. Please see if there are questions.

Hi guys, thanks for taking my questions. So, if the China handsets bottom in Q3 and then they grow in Q4, that's September quarter. September quarter I think is when we're supposed to get the Apple step down, which may be an offset. So I guess just how are you thinking about handset seasonality into September quarter given those kind of competing dynamics? How should we be thinking about that?

I mean, so do you think handsets grow sequentially in September or not given those two things?

Okay. And for my follow-up, you talked about agentic devices and agentic smartphones like driving a shift and things into '27. Do you think the memory issues are going to be done by then? How much memory does an agentic smartphone need and is that something that's going to continue to be an issue as we go into 2027?

Thank you for the question, Stacy. Look, it's a little early to talk about '27. I think one thing to see is the pace of change of AI is getting scale. When I think about the framework that I talked about before, which you go from inference to now how you generate demand for tokens with a lot of agents, I think what we see is two things. One is the devices are changing the requirements and the design and the players. We see interesting associations now starting to form between smartphones and AI companies. We're starting to see some very interesting dynamics mix there which is changing the nature of designs. We see designs moving towards products that have much more capable CPU to run those type of products. And there's a lot of noise in the memory environment right now. I wish I could make a prediction on '27, it's a little early, but we see a combination of some of the same companies that want a lot of demand for data centers also getting involved with some of the devices at the edge as well. And we see new memory players coming and building capacity. So we're going to have to monitor the situation and see what happens in '27.

The next question is from the line of Timothy Currie with UBS. Please proceed with your questions.

Thanks a lot. I want to ask also about this custom that is going to ship in the fourth quarter of this year. I know you brought a team in from Alpha Wave. It seems a little fast to get something to market that includes your IP by the end of this year given cycle time. So, I think they had some chiplet stuff and maybe some custom DSP stuff. Is that the sort of thing you're talking about or is this truly something that includes a big portion of your IP that you've been able to turn around since the deal closed?

Look, I think two answers. So we have, you know, I'm pretty positive for this. The past several quarters we've been talking about engaging with customers in the data center. So I think when we started engaging and talking about some of the Qualcomm capabilities, it was probably even before the acquisition of Alpha Wave. I think the acquisition of Alpha Wave increased our execution capabilities and the portfolio of IP. I think you should expect that we're going to have longer multi-generation agreements with those companies that bring a lot of Qualcomm capabilities to the table. I wish I could provide more details, but like I said, I don't want to front-run what we're going to do on June 24, but I think we will provide a detail of everything we're doing, our customer wins, our roadmap, and our IP.

Thanks a lot. And then I guess just as a follow-up, is the assumption still the same that around your share at Apple? I know there's some signs that there's going to be a little more aggressive displacement. Is the assumption still that it's going to be 20% for the new launch? Thanks.

Our next questions are from the line of Joe Moore with Morgan Stanley. Please proceed with your question.

Yeah, thank you. You alluded to the weakness being more in the medium tier and the premium tiers being stronger. Is that something you can see where you're sort of taking limited memory allocation and that sort of drives just the sort of limit that puts it in the higher tier? Just what are you seeing in terms of what that's doing to your mix going forward?

Okay. And thank you. And you talked about 6G in 2029. I mean, does that time frame represent introduction of technology? Are there shipments then? Just anything you can tell us about when 6G starts to become relevant?

Yes. And look, thank you for the question. The reason I brought it up is because 6G is going to feel very different than the other G's for Qualcomm. I also believe that 6G creates some very interesting sovereign AI and data center opportunities for Qualcomm as well. You should be thinking about our timeline and we've been consistent with it. We will have prototype-based demonstrations in 2028. Likely we're going to have first silicon in '28 and we want early launches in 2029 and then we expect that to get scale by 2030.

Our next question is from the line of Ross Seymore with Deutsche Bank. Please proceed with your questions.

Hi guys, thanks for letting me ask a question. I want to go back to the handset side and if you could just level set us to whether it's the fiscal second quarter or fiscal third quarter, what percentage of handsets is China? And you mentioned that a lot of the dynamics is how far you're under-shipping versus true demand. Are you believing that true demand whether it's China or elsewhere is truly weakening still or is that side of the equation stabilizing despite the memory issues?

Okay. And I guess for my follow-up question, shifting gears to the automotive side of things, you mentioned about the ADAS side starting to ramp and growing 50% this year in this next quarter. So doing very, very well. As you go from more of a cockpit business to the ADAS mix increasing, how does that change the revenue trajectory and perhaps the gross margin trajectory in your automotive business?

Yes. So hi, this is Cristiano. I think what you see is it accelerates revenue dramatically because it's a lot more silicon content. And that is true actually on both sides. I think what you saw is when we went from generation 3 to generation 4 in digital cockpit, we keep mentioning the car is really becoming a computing surface. We saw a step function increase in the capability in silicon. You expect another one when we go from fourth generation to fifth generation. And as we add processors and you're starting to see more and more development of L2+ and in direction towards level three, you're starting to see the amount of computing power going up. So for us, it's basically a significant revenue accelerator within automotive.

Thank you. Our last question is from the line of Vivek Arya with Bank of America Securities. Please proceed with your questions.

Thanks for taking my questions. For the first one, Akash, you mentioned Apple product sales I think $2 billion plus for fiscal '27. What about the royalty contribution? How does that evolve as you approach the date for renegotiating that business?

Okay. And for my follow-up, Cristiano, back to this hyperscaler discussion. I realize you'll give more details at Analyst Day, but was Qualcomm's intention to approach this from an ASIC perspective? I thought you planned to enter the data center from a merchant perspective, but are you saying that now the goal is to approach it from an ASIC perspective? And if that is the case, what impact does it have on margins? Are you really going to compete head-on with the other ASIC suppliers that are out there? So, this is going to be more kind of a one-on-one type approach to the market as opposed to approaching the market in a broader merchant. So, just what is kind of the broader go-to-market strategy that Qualcomm has in this business?

Very good question. I think the answer is all of the above. Look, first of all, as a new entrant, we are very flexible, but we also look at the reality of what's happening in the hyperscalers. You can see that the majority of the revenue for semiconductor companies is heavily concentrated in a few number of very large companies and those companies have now indicated very clearly they have different approaches. As the data center gets disaggregated, you have different approaches to compute and connectivity. And you should assume that Qualcomm will play on merchant and on custom. It's going to be a combination of how we configure our IP and different IP blocks for different solutions. It's going to be a bespoke business. And specifically on your question on this custom engagement we talked about, we do expect that to be accretive at the operating margin level.

Thank you. That concludes today's question and answer session. Mr. Amon, do you have anything further to add before joining the call?

I think the obvious thing I want to say is to please ask everyone to attend our June 24 Investor Day. We intend at the Investor Day to really highlight not only everything that is happening with the new Qualcomm, but also the details of the products and technology we have been developing for the data center space, provide an update on how physical AI is transforming our business, and provide the clarity that we have today how really agents and agent experiences actually have a broad implication in our entire business. And I look forward to speaking to all of you and I would like to thank our partners, our employees for a great quarter as we continue to transform Qualcomm. Thank you very much.

Ladies and gentlemen, this concludes today's conference call.