Qualcomm and Arm beat forecasts but shares fall: Qualcomm posts $10.3 billion and a record car-chip quarter, Arm hits $1.44 billion
Qualcomm earned $10.3 billion in its September quarter and Arm a record $1.44 billion, but both chip stocks fell after hours on outlook and spending worries.
At a glance
- Qualcomm reported revenue of $10.32 billion for its fiscal fourth quarter to late September, down 8% from a year earlier but above the roughly $10.1 billion analysts expected; adjusted earnings were $2.17 a share.
- Car chips brought in more than $2 billion in a quarter for the first time, and Qualcomm repeated its target of $5 billion in data-centre revenue in fiscal 2027.
- Qualcomm forecast $10.4 billion to $11.2 billion for the December quarter, above estimates, but its profit outlook was a little light and it plans about $2.5 billion of capital spending; shares fell in after-hours trading.
- Arm's revenue rose 27% to a record $1.44 billion, led by a 50% jump in licensing; royalties grew only 8% to $670 million as smartphone sales weighed, and its shares fell about 3.5%.
Qualcomm and Arm, the two companies behind the chips in most of the world's smartphones, both beat Wall Street's forecasts on Wednesday, November 4, and both saw their shares fall in late trading. Qualcomm reported $10.32 billion in revenue for the quarter to late September and a record quarter for its car chips. Arm's revenue rose 27% to a record $1.44 billion.
Investors were not buying the beats. Qualcomm's profit forecast for the December quarter came in slightly light and it plans to spend far more on equipment than expected. At Arm, the growth came mostly from one-off licence deals, while royalties on chips actually shipped barely grew.
Qualcomm's numbers against forecasts
| Measure | Result | Expected / comparison |
|---|---|---|
| Revenue, fiscal Q4 (to late Sept) | $10.32 billion | about $10.1 billion expected; down 8% on a year earlier |
| Adjusted earnings per share | $2.17 | $2.16 expected |
| Handset chip revenue | about $5.1 billion | — |
| Automotive revenue | more than $2 billion | first $2 billion quarter |
| Fiscal 2026 revenue (GAAP) | $43.1 billion | — |
| Revenue forecast, Dec quarter | $10.4–11.2 billion | about $10.5 billion expected |
| Capital spending, coming year | about $2.5 billion | about $1.9 billion expected |
The quarter landed near the top of the $9.7 billion to $10.5 billion range Qualcomm had given three months ago. Handsets remain the largest business, at about half of revenue, but they are no longer where the growth is. Management said revenue outside phones should grow by more than 60% from a year earlier, and it repeated its target of $5 billion from data-centre chips in fiscal 2027, a business that barely existed two years ago.
Cars are already there. The automotive unit, which sells the Snapdragon chips that run dashboards, driver-assistance systems and in-car connections, passed $2 billion in a single quarter for the first time.
The shares slipped about 2% after hours, and were down further at one point. The concern was cost: building data-centre chips that can compete with Nvidia and AMD needs heavy spending, and the $2.5 billion capital budget was about $600 million more than analysts had pencilled in.
Arm's record, and the royalty problem
Arm designs the processor blueprints that Qualcomm, Apple, MediaTek, Google, Amazon and others build on, and it earns money in two ways: an upfront licence fee for a design, then a royalty on every chip made with it.
| Arm, quarter to Sept 30 | Amount | Change on a year earlier |
|---|---|---|
| Total revenue | $1.44 billion | up 27% (record for a September quarter) |
| Licensing and other | $773 million | up 50% |
| Royalties | $670 million | up 8% |
| GAAP net income | about $130 million | $0.12 a share |
Arm said royalties from data-centre chips doubled from a year earlier and royalties from "physical AI", such as robots and cars, rose 50%. But royalties overall grew just 8%, held back by a weak smartphone market. Phones are still the biggest source of Arm's royalty income, so a slow year for handset sales shows up directly in its numbers.
Its forecast for the December quarter was about $1.5 billion, slightly short of some estimates. The shares fell about 3.5% to around $185 in extended trading. They have already dropped sharply from their peak this year.
What it means for phone buyers
For people buying a phone in Pakistan, India or the Gulf, the two reports point the same way: the phone market is soft, and chipmakers are looking elsewhere for growth. Qualcomm's Snapdragon chips power many of the mid-range and flagship Android phones sold in South Asia, including Samsung, Xiaomi, Oppo and Vivo models, and almost every smartphone sold anywhere runs on an Arm-based design.
Both companies are betting that the next decade of growth will come from data centres, cars and AI devices rather than phones, which is why they are spending heavily now. If that spending pays off, it means more competition for Nvidia in AI servers. If it does not, the costs land on their margins.
What to watch next
Qualcomm's December-quarter results, covering the holiday sales season and the launch of new Snapdragon flagship phones, are expected in early February 2027. Arm usually reports its December quarter at about the same time. Investors will look first at whether Qualcomm's data-centre orders turn into revenue, and whether Arm's royalties pick up as new phones and AI servers ship.
Questions people are asking
Why did Qualcomm stock fall after beating earnings?
Revenue and earnings beat forecasts and sales guidance was strong, but the profit forecast for the December quarter came in slightly below estimates and planned capital spending of about $2.5 billion was well above the roughly $1.9 billion analysts expected.
How much did Arm earn in the September 2026 quarter?
Arm's revenue was a record $1.44 billion, up 27% from a year earlier, with $773 million from licensing and $670 million from royalties. GAAP net income was about $130 million.
