Qualcomm Stock Falls Due to Prolonged Memory Shortage Forecast

• Qualcomm beat Q1 estimates with $3.50 adjusted EPS and $12.25 billion revenue, but guidance fell short of consensus due to memory supply constraints affecting smartphone manufacturers
• Handset sales reached $7.82 billion (up 3% annually), while faster-growing segments included IoT at $1.69 billion (up 9%) and automotive at $1.1 billion (up 15%)
• The memory shortage, caused by data center demand competing with consumer electronics, may push smartphone makers toward higher-tier devices better able to absorb memory price increases

Summary: Qualcomm Stock Drops on Memory Shortage Concerns

Key Performance Metrics:

Qualcomm reported fiscal Q1 earnings that exceeded expectations, with adjusted EPS of $3.50 (vs. $3.41 expected) and revenue of $12.25 billion (vs. $12.21 billion expected). However, the stock fell 6.64% in regular trading due to weakened guidance for the current quarter.

Main Issue:

The company's outlook disappointed due to the ongoing global memory shortage. Data center demand is consuming memory supply that would typically go to smartphones and consumer electronics. CEO Cristiano Amon stated, "We're starting to see that memory is going to define the size of the mobile market."

Business Segment Performance:

• Handset sales: $7.82 billion (up 3% year-over-year)
• Internet of Things: $1.69 billion (up 9%)
• Automotive and robotics: $1.1 billion (up 15%)
• QTL licensing revenue: $1.59 billion
• Net income: $3 billion ($2.78 per diluted share), down slightly from prior year

Market Implications:

Qualcomm's smartphone customers are closely managing inventories due to memory availability constraints. While handset demand remains strong amid an upgrade cycle, supply issues are expected to persist. The company anticipates customers will focus on higher-tier devices better able to absorb memory price increases rather than budget handsets.

CFO Akash Palkhiwala confirmed the guidance gap versus consensus was directly attributable to memory constraints, characterizing it as "an industry issue affecting everything in consumer electronics." The shortage appears structural, driven by competing demand from AI and data center applications.