QUALCOMM Q3 2025 Earnings Report

QUALCOMM EPS Results

• Actual EPS: $2.77
• Consensus EPS: $2.71
• Beat/Miss: Beat by +$0.06
• One Year Ago EPS: $2.33

QUALCOMM Revenue Results

• Actual Revenue: $10.37 billion
• Expected Revenue: $10.33 billion
• Beat/Miss: Beat by +$30.65 million
• YoY Revenue Growth: +10.40%

QUALCOMM Announcement Details

• Quarter: Q3 2025
• Date: 7/30/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, July 30, 2025
• Conference Call Time: 4:45PM ET

QUALCOMM (NASDAQ:QCOM) engages in the development and commercialization of foundational technologies for the wireless industry worldwide. It operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI). The QCT segment develops and supplies integrated circuits and system software based on 3G/4G/5G and other technologies for use in wireless voice and data communications, networking, computing, multimedia, and position location products. The QTL segment grants licenses or provides rights to use portions of its intellectual property portfolio, which include various patent rights useful in the manufacture and sale of wireless products comprising products implementing CDMA2000, WCDMA, LTE and/or OFDMA-based 5G standards and their derivatives. The QSI segment invests in early-stage companies in various industries, including 5G, artificial intelligence, automotive, consumer, enterprise, cloud, IoT, and extended reality, and investments, including non-marketable equity securities and, to a lesser extent, marketable equity securities, and convertible debt instruments. It also provides development, and other services and related products to the United States government agencies and their contractors. The company was incorporated in 1985 and is headquartered in San Diego, California.

QUALCOMM Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Qualcomm reported $10.4 billion in Q3 revenue and $2.77 non-GAAP EPS, both near the high end of guidance, and reaffirmed Q4 revenue guidance of $10.3 billion–$11.1 billion with EPS of $2.75–$2.95.
• Positive Sentiment: Automotive and IoT revenues rose 21% and 24% year-over-year, respectively, with 12 new Snapdragon digital chassis designs and a collaboration on BMW’s Neuya Class vehicles as Qualcomm pursues a $22 billion combined target by FY 2029.
• Positive Sentiment: Qualcomm is diversifying beyond handsets with Snapdragon eight Elite powering 124 AI-smartphone designs, >100 Snapdragon X series AI PCs on track by 2026, and 19 XR device designs including Meta and Xiaomi AI glasses.
• Positive Sentiment: The company is entering the data center market with Orion CPUs and NPU accelerator cards, plans to close the AlphaWave IP acquisition to boost high-speed connectivity IP, and is in advanced talks with a leading hyperscaler for FY 2028 revenue contribution.
• Neutral Sentiment: Qualcomm expects Samsung share to normalize at a 75% baseline for Galaxy S devices, while its new multi-year agreement with Xiaomi strengthens handset partnerships amid a decline in Apple volume.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm Third Quarter Fiscal twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we'll conduct a question and answer session. As a reminder, this conference is being recorded 07/30/2025.

[Operator]

The playback number for today's call is 8776606853. International callers, please dial (201) 612-7415. Playback reservation number is 1300000754332. Would now like to turn the call over to Mauricio Lopez Odoyen, Vice President of Investor Relations. Mr. Lopez Odoyen, please go ahead.

[Mauricio Lopez-Hodoyan, VP - IR at Qualcomm]

Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Christian Ramon and Akash Palkawala. 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.

[Mauricio Lopez-Hodoyan, VP - IR at Qualcomm]

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 ks, 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 Ramon.

[Cristiano Amon, President & CEO at Qualcomm]

Thank you, Mauricio, good afternoon, everyone. Thanks for joining us today. In fiscal Q3, we delivered revenues of $10,400,000,000 and non GAAP earnings per share of $2.77 which was near the high end of our guidance range. Our chipset business delivered revenues of $9,000,000,000 reflecting strength in automotive and IoT and ongoing growth in handsets. Automotive and IoT revenues increased 2124% year over year respectively.

[Cristiano Amon, President & CEO at Qualcomm]

Our licensing business revenues were $1,300,000,000 Our momentum in automotive and IoT is the result of strong execution of our growth and diversification strategy. We remain on track to meet our fiscal twenty twenty nine target for combined automotive and IoT revenues of $22,000,000,000 We're forecasting fiscal twenty twenty five to be the second consecutive year of greater than 15% year over year growth in total QCT non Apple revenues. I will now share some key highlights from the business. In handsets, we extended our Xiaomi collaboration with a multi year agreement. Snapdragon eight Series platforms will power multiple generations of Xiaomi's flagship devices for China and global markets with volume increasing each year of the agreement.

[Cristiano Amon, President & CEO at Qualcomm]

The Snapdragon eight Elite continues to set the pace of innovation in mobile processors and is leading the transition to AI smartphones with 124 designs shipped or announced today. AI usage in smartphones is increasing. For example, Samsung noted that 70 of Galaxy S25 users are utilizing Galaxy AI and usage of Google Gemini AI has nearly tripled among S25 users compared to the S24. Looking ahead, we expect the range of own device in AgenTek AI use cases will continue to expand and reshape the mobile industry. We are optimistic about the Android ecosystem's leadership in AI.

[Cristiano Amon, President & CEO at Qualcomm]

As we reach the one year mark of our entry into AI PCs, we are encouraged by the steady progress we're seeing with our Snapdragon X series platforms. Multiple new devices launched during the quarter from leading OEMs such as Acer, Dell, HP, Lenovo, Microsoft and Samsung and we remain on track for more than 100 designs to be commercialized through 2026. Snapdragon is transforming personal computing experiences and the design traction we're seeing from major customers reflect confidence in our technology roadmap, product portfolio and long term commitment to PCs. In the 2025, according to third party sources Snapdragon based PCs continue to make up approximately 9% of Windows laptops sold above the $600 price tier in retail U. S.

[Cristiano Amon, President & CEO at Qualcomm]

With the top five European countries. While we are at the beginning of our journey into PCs, we remain excited about the long term opportunity and continue to work toward our target of achieving $4,000,000,000 in revenue by fiscal twenty nineteen. In XR, Snapdragon continues to be the platform of choice for smart glasses and mixed reality devices. We now have 19 designs from our global partners. Demand for Meta's AI smart glasses continue to exceed expectations and they recently expanded the portfolio with the launch of the new Meta Oakley smart glasses and introduction of new Ray Ban styles.

[Cristiano Amon, President & CEO at Qualcomm]

Xiaomi's new AI glasses launched in the quarter were also well received. All three are powered by the Snapdragon AR1 Gen one platform. At the Augmented World Expo USA, we conducted the world's first demonstration of 1,000,000,000 parameter model running locally on smart glasses powered by our next generation Snapdragon AI platform. We also introduced a smart ring controller reference design as a new input device for discrete and intuitive interactions. Our Snapdragon digital chassis solutions continue to see strong traction across the automotive ecosystem with 12 new designs during the quarter and a total of 50 vehicle launches this fiscal year.

[Cristiano Amon, President & CEO at Qualcomm]

We're incredibly excited about BMW's upcoming Neuya class vehicles, which will launch globally with our new ISO safety certified ADAS tech later this year. This will include our Snapdragon Ride platforms and our jointly developed driving stack which meet safety standards in The U. S. And Europe. More details about the deployment certifications and capabilities will be shared at the IAA Mobility Show in September.

[Cristiano Amon, President & CEO at Qualcomm]

Our Snapdragon Ride platforms and driving stack are also gaining momentum more broadly with 20 OEMs programs for various highway and urban navigate on autopilot solutions. The majority of these programs will launch in the next eighteen months across all global regions. In industrial IoT, we continue to expand our ecosystem of partners and we're pleased with the traction of our Dragon Wing platforms. At Computex, we announced new collaborations with DigiWin and ITNA to utilize our AI on prem appliance solution and AI inference suites for enterprise automation. We also expanded our work with IBM on their Maximo AI assistant powered by Watson XAI.

[Cristiano Amon, President & CEO at Qualcomm]

Our broad range of OEMs and partners now includes companies such as ASUS IoT, Dell, Everfocus, iBase, Lenovo, Deloitte, END, Humane, Palantir and many others. We're also gaining traction with our industrial grade Dragon Wing IQ series with up to 100 tops of AI inference performance as well as the Dragonwing Intelligent Video Suite, a platform designed to extract intelligence from any video frame and create intelligent reasoning workflows for enterprises across many verticals. We've also seen continued strength in edge networking driven by strong demand for Wi Fi seven gateway platforms across retail and carrier customers and for five gs enabled fixed wireless access platforms for our carrier customers. Now, I would like to provide an update on our expansion into the data center. This represents a new growth opportunity for Qualcomm and is a logical extension of our diversification strategy as we continue to demonstrate leadership in CPU performance and NPU efficiency.

[Cristiano Amon, President & CEO at Qualcomm]

As inference games scale, cloud service providers are building dedicated inferencing clusters focused not only on performance, but also efficiency, specifically tokens per dollar and tokens per watt. These factors combined with the shift from merchant x86 CPUs to custom ARM compatible CPUs for both cloud computing and AI head node create an entry point for Qualcomm. We're currently building NPU based AI inference accelerator cards as well as custom SoCs for general purpose and AI head node compute solutions utilizing our Orion CPU. We also reached an agreement to acquire AlphaWave IP Group plc, a global leader in high speed wire connectivity and compute technologies for data centers, AI, data networking and data storage. The acquisition is expected to close during the 2026 subject to customary closing conditions.

[Cristiano Amon, President & CEO at Qualcomm]

Alpha Wave's leading IP and data center design capabilities are key assets that will complement our Orion CPU and Hexagon NPU processors and help accelerate our roadmap. While we are in the early stages of this expansion, we are engaged with multiple potential customers and are currently in advanced discussions with a leading hyperscaler. If successful, we expect revenues to begin in the fiscal twenty twenty eight timeframe. Additionally, we signed an MOU with Humane to develop AI data centers in Saudi Arabia and deliver highly efficient and scalable cloud to edge hybrid AI inferencing solutions for local and international customers. We also announced that our Orion CPUs can be integrated with NVIDIA GPUs for high performance factories using the NVIDIA NVLink Fusion architecture.

[Cristiano Amon, President & CEO at Qualcomm]

We will provide further updates as we make progress. Over the past twelve months, we have continued to see AI and generative AI advance at an accelerated rate and we're both excited and confident in the opportunities this is creating for Qualcomm across all our businesses. As GenAI changes the human computer interface and AgenTek AI experiences continue to evolve, the mobile industry is being redefined and a new generation of personal AI devices are emerging. Smart glasses and wearables such as smart watches, earbuds and other form factors are being transformed into personal AI devices as they connect the user directly to the AI agent and model. These devices are quickly transitioning from simply extending smartphone experiences to now providing new and unique personalized AI and agentic use cases.

[Cristiano Amon, President & CEO at Qualcomm]

These devices will evolve independently of the smartphone ecosystem and become a significant opportunity. Given our technology leadership in mobile, XR and wearables and the breadth of our P and product portfolio, we expect to be the industry preferred solution provider in this new category. Specifically, personal AI devices will require Snapdragon's always on cloud connectivity, five gs and micro power Wi Fi, power efficient processing on device AI best in class imaging, audio, video, sensors and context capabilities. Meta AI smart glasses are currently the best example of personal AI. We're very optimistic about the trends we see in this area with major AI players, application developers and device makers investing in this space.

[Cristiano Amon, President & CEO at Qualcomm]

Physical AI is another technology that is reshaping industries and creating new opportunities particularly in robotics. Robotics require high performance computing including powerful on device extended battery life, reliable connectivity, a higher level of silicon integration and advanced computer vision and sensor fusion to interpret and understand real world information in real time and make decisions locally. These requirements are perfectly aligned with our strengths in our technology and product portfolio. Our right to play in this new segment is similar to our expansion into automotive. Furthermore, our experience in industrial and safety grade silicon, perception and sensing technologies and ADAS and autonomy provide a very competitive foundation to develop highly differentiated solution for autonomous robots, next generation industrial automation and humanoid robotics.

[Cristiano Amon, President & CEO at Qualcomm]

We're incredibly excited about this opportunity for which third party estimates indicate a potential TAM of $1,000,000,000,000 in the next decade. I would now like to turn the call over to Akash.

[Akash Palkhiwala, CFO & COO at Qualcomm]

Thank you, Cristiano. Good afternoon, everyone. Let me begin with our third fiscal quarter results. We delivered revenues of $10,400,000,000 and non GAAP EPS of $2.77 which was near the high end of our guidance range. QTL revenues of $1,300,000,000 and EBT margin of 71% were above the midpoint of our guidance.

[Akash Palkhiwala, CFO & COO at Qualcomm]

QCT delivered revenues of $9,000,000,000 and EBT of $2,700,000,000 with year over year growth of 1122% respectively. QCT EBT margin of 30% was at the high end of our guidance range. QCT handset revenues increased 7% year over year to $6,300,000,000 reflecting strong demand for premium tier handsets enabled by our Snapdragon eight Elite platform. QCT IoT revenues grew 24% year over year to $1,700,000,000 The outperformance relative to expectations was driven by increased demand for our Snapdragon AR1 chipset, the clear industry leader in emerging AI smart glasses category. We delivered another record quarter in QCT Automotive with revenues of $984,000,000 an increase of 21% year over year, driven by content growth in new vehicle launches with our Snapdragon digital chassis platform.

[Akash Palkhiwala, CFO & COO at Qualcomm]

Lastly, we returned $3,800,000,000 to stockholders, including $2,800,000,000 in stock repurchases and $967,000,000 in dividends, aligned with our commitment to return 100% of our free cash flow in the fiscal year. Before turning to guidance, a quick reminder that our fourth quarter and fiscal twenty twenty five includes thirteen weeks relative to a fourteen week quarter in the year ago period. For the fourth quarter, we are forecasting revenues of 10,300,000,000.0 to $11,100,000,000 and non GAAP EPS of 2.75 to $2.95 In QTL, we estimate revenues of 1,250,000,000.00 to $1,450,000,000 and EBT margins of 69% to 73%. In QCT, we expect revenues of $9,000,000,000 to $9,600,000,000 and EBT margins of 27% to 29%. We anticipate QCT handset revenues to grow approximately 5% sequentially consistent with typical historical trends despite lower Apple revenues.

[Akash Palkhiwala, CFO & COO at Qualcomm]

We estimate QCD IoT revenues to be flat sequentially and QCD Automotive revenues to reach $1,000,000,000 in the fourth fiscal quarter. Lastly, we estimate non GAAP operating expenses to be approximately $2,350,000,000 in the quarter. In closing, we are very pleased with our performance in fiscal twenty twenty five as we continue to execute on the financial metrics we outlined at our Investor Day last year. Based on the midpoint of our guidance, we are positioned to deliver revenue and non GAAP EPS growth of 1216% respectively relative to fiscal twenty twenty four. We are forecasting fiscal twenty twenty five to be the second consecutive year of greater than 15% year over year growth in total QCT non Apple revenues.

[Akash Palkhiwala, CFO & COO at Qualcomm]

We anticipate QCT IoT and automotive revenues to grow by approximately 2035% respectively, reinforcing our confidence in achieving our fiscal twenty twenty nine target of $22,000,000,000 in combined automotive and IoT revenues. We are pleased to see our customer relationships strengthening during a time of global trade volatility, including the upcoming global ADAS launch with BMW and the recently signed strategic agreement with Xiaomi. We remain focused on maximizing shareholder returns by executing across a broad range of growth and diversification opportunities while maintaining operating discipline. Lastly, I'd like to invite you to tune into our upcoming Snapdragon Summit event taking place on September to learn more about our technology leadership and new product launches. This concludes our prepared remarks. Back to you Mauricio.

[Mauricio Lopez-Hodoyan, VP - IR at Qualcomm]

Thank you, Kash. Operator, we're now ready for questions.

[Operator]

Thank you. Our first question comes from the line of Joshua Buchalter with TD Cowen. Please proceed with your questions.

[Joshua Buchalter, Director - Equity Research at TD Cowen]

Hey guys, thanks for taking my question. I wanted to start with the handset market. I think you just spoke to 5% growth in the September despite the lower share that you communicated at Apple. Can you speak to the drivers there? I mean, I think Xiaomi was up meaningfully in the quarter, which is typical in the June.

[Joshua Buchalter, Director - Equity Research at TD Cowen]

But I think investors are worried about some level of pull ins. Are you seeing any evidence of that specifically related to China? Thank you.

[Akash Palkhiwala, CFO & COO at Qualcomm]

Hi, Josh, it's Akash. We're not seeing any evidence of pull in. I think the upside that we guided in the September in handset revenue stream is really driven by our new product launch. As I mentioned in my prepared remarks, we're going to announce our new chip at the September and we are already working with several OEMs for launch of new devices based on a tremendous interest in it. And what you're seeing is really people getting ready for launch of new devices.

[Joshua Buchalter, Director - Equity Research at TD Cowen]

Got it. Thank you. And to follow-up, I wanted to ask about the data center business and hyperscale engagement you mentioned specifically. Any details you can give us on the scope of that engagement? Is that for an ARM based CPU?

[Joshua Buchalter, Director - Equity Research at TD Cowen]

Is it an accelerator? And you mentioned fiscal twenty twenty eight is potential if that converts. Is that the right timeframe to think about contribution from your data center business more broadly at other customers as well? Thank you and congrats on the results.

[Cristiano Amon, President & CEO at Qualcomm]

Thank you. Thank you, Joshua. This is Cristiano. We can't really disclose more other than what we said in the script. We are in advanced discussions.

[Cristiano Amon, President & CEO at Qualcomm]

We have been executing on a product. As we said before, we always felt that we had IP that were very relevant to the data center. I think the AlphaWave provides complementary IP allow us to build custom SoC products and we're pleased with the way we're developing this. I am sure we'll be able to share more as we probably conclude some of those discussions.

[Operator]

Our next question is from the line of Samik Chatterjee with JPMorgan. Please proceed with your question.

[Samik Chatterjee, MD & Equity Research Analyst at J.P. Morgan]

Hi. Thanks for taking my questions. Christian, maybe I can follow-up on the data center road map here or the sort of thought process and strategy around it. Less so maybe but in terms of how do you envision sort of Alphawave integrating into the sort of portfolio of the stack capability that you have currently? And in relation to just thinking about sort of how you're going about selecting customers that you want to approach

[Samik Chatterjee, MD & Equity Research Analyst at J.P. Morgan]

What's typically sort of in terms of thinking about customization relative to standardization of the chipsets? How you're sort of thinking about deal sizes that would make sense for you in the longer run for this business? Any thoughts around that? Thank you. And I have a follow-up.

[Cristiano Amon, President & CEO at Qualcomm]

Very good. Thank you for your question. I know there's a lot of topics in that question. I'm trying to probably give an overview. As we said before and we said in the script, we have been focused on building two products.

[Cristiano Amon, President & CEO at Qualcomm]

One is ability to leverage our CPU asset. And that happens in two situations. One of course is a general purpose CPU. We've been very focused on hyperscalers. They have first party workloads for ARM compatible CPU.

[Cristiano Amon, President & CEO at Qualcomm]

The other one is the head unit for inferencing clusters. As AI start to get scale and we really look of how we're starting to see inference taking over training. There's a new dynamic in the marketplace, which is about ability to be efficient with tokens per dollar as well as energy. That creates an opportunity for us. For that, we have been building accelerator cards and we will be building a rack as well.

[Cristiano Amon, President & CEO at Qualcomm]

And those are the two areas that we're building product roadmap. We're very focused on customers. They have the ability to put first party workloads or inferencing cluster. The Alpha Wave IP is important. It provide us the ability to scale out and provide connectivity.

[Cristiano Amon, President & CEO at Qualcomm]

We believe it's leading connectivity in the industry. And that should inform you the type of customers that we've been focusing on. We think there's a very large TAM as you know. There is an opportunity for Qualcomm to play if you have leading IP. Of course, as this is a new market for us and we have been planning for it, we're going to be very careful about making disclosures.

[Cristiano Amon, President & CEO at Qualcomm]

We're going to wait until they become factual and we're excited about the engagement we have today. We are in advanced negotiations with one significant customer and hopefully that creates a halo effect that could validate our platform and create other opportunities down the road. Thank you.

[Samik Chatterjee, MD & Equity Research Analyst at J.P. Morgan]

Thank you for that. And for my follow-up, in the handset business for the fiscal 3Q here, you had 7% revenue growth year over year, which I think did sort of miss modestly you're getting to last quarter for about 10% growth. So maybe if you can shed any color in terms of if you did see any parts of the market that were weaker than you expected in the quarter? And then maybe similarly, when you when I think about your guidance for fiscal fourth quarter here, it looked like you're getting to about a high single digit growth even as Apple even with the impact of Apple. So maybe you've imparted out in terms of this how the strength is because that seems like a pretty robust number for fiscal fourth quarter even with the loss of capital revenues?

[Akash Palkhiwala, CFO & COO at Qualcomm]

Yes. Samik, it's Akash. On the third quarter, we had a slightly weaker mix than we expected. As you know that this is a quarter that is seasonally weaker for us as there are no flagship launches. And that mix is really the weaker mix is more than offset by the strength you're seeing in the September, where as I mentioned earlier to Josh's question, we're launching the new chip.

[Akash Palkhiwala, CFO & COO at Qualcomm]

We have flagship launches coming in at the end of the quarter and we are seeing the demand increase because of that reason.

[Operator]

Our next question comes from the line of Stacy Rascon with Bernstein Research. Please proceed with your question.

[Stacy Rasgon, MD & Senior Analyst at AB Bernstein]

Hi guys. Thanks for taking my question. Given the guidance into September, but the dynamics around Apple and everything else, I mean, would you consider normal seasonal into December quarter? How should we think about drivers as you currently see them against that normal against that seasonal trend? How should we expect things?

[Stacy Rasgon, MD & Senior Analyst at AB Bernstein]

If there's anything else funky going on in December that we should know about that would influence results versus what might be more typical?

[Akash Palkhiwala, CFO & COO at Qualcomm]

Yes. Stacy, it's Akash. Assuming you're asking about the December quarter, note we expect normal revenue seasonality for all businesses, of course, adjusted for the lower share in Apple phone launches that we've previously discussed, but nothing else to highlight in all other businesses.

[Stacy Rasgon, MD & Senior Analyst at AB Bernstein]

I mean, what would you consider normal seasonal then?

[Akash Palkhiwala, CFO & COO at Qualcomm]

Well, we're not specifically guiding the quarter at this point, but I think you've seen a trend in the last several years and you'd expect the same quarterly trend just adjusted for the lower Apple volume for the share we've provided.

[Operator]

Thank you. Our next question is from the line of Joe Moore with Morgan Stanley. Please proceed with your question. Mr. Moore, your line is live for question.

[Operator]

Perhaps you're on mute. Thank you. Our next question will be from the line of Chris Caso with Wolfe Research.

[Chris Caso, Managing Director at Wolfe Research LLC]

Yes.

[Chris Caso, Managing Director at Wolfe Research LLC]

Thank you. If I could just expand upon some of the commentary with regard to the December. My understanding is last year, the Chinese OEMs started pulling forward the launch a little bit of some of the flagship devices. Also, as we were last year, there was an extra week in the quarter. So and I guess maybe just some more granularity on the puts and takes on December taking that into account.

[Chris Caso, Managing Director at Wolfe Research LLC]

How much of a lift is that in the December? And then does that turn into a more of a headwind as you go into the March?

[Akash Palkhiwala, CFO & COO at Qualcomm]

Yes. I think, Chris, the business remains very strong. So whether you look at the Android business, automotive, IoT, all the trends continue with the growth rates that we've previously outlined for the business. So there's nothing significant or unique that I want to point out there. I think we've talked about the Apple share dynamics, so that is a factor.

[Akash Palkhiwala, CFO & COO at Qualcomm]

But outside of that, I think you should think of this as a very strong quarter for us. Seasonally, the strongest quarter for us is December and that will still be true regardless of the lower Apple share.

[Chris Caso, Managing Director at Wolfe Research LLC]

Got it. Okay.

[Chris Caso, Managing Director at Wolfe Research LLC]

If I could follow on with the data center business and you don't understand that you can't talk so much about some of the progress and design wins that you hope to have on that until they become factual. What about from a spending side? And moving into a new line of business, what's going to be the impact on spending? And then as AlphaWave closes, what will be the effect of that on sort of revenue expenses and EPS?

[Akash Palkhiwala, CFO & COO at Qualcomm]

Yes. So from a spend perspective, Chris, the way we've managed OpEx over the last several years, you've seen us very small growth in OpEx over the last four years. And the way we've managed it is really kind of absorbing the salary increases and reallocating existing spend towards diversification and growth. And really the hiring as we go forward is really going to be focused on new skills that are required to execute on our plan. And so to the extent that there are new skills required to execute on the data center diversification assets, we will invest in that.

[Akash Palkhiwala, CFO & COO at Qualcomm]

But outside of that, we plan to be pretty careful managing OpEx going forward.

[Operator]

Our next question comes from the line of Ross Seymar with Deutsche Bank. Please proceed with your question.

[Ross Seymore, Managing Director at Deutsche Bank]

Hi, guys. Thanks. I may ask a couple of questions. Just want to get into the OEM side. Akash, you've been very clear about what's happening on the Apple side of things.

[Ross Seymore, Managing Director at Deutsche Bank]

But recently, you've seen Samsung launch a couple of models with its own processor. I just wondered, how do you compare and contrast that against the x85 that you guys are rightly excited about going forward? Do you think you will maintain the 100% share on the Galaxy S generation or is that decision not quite made yet? Any color on that would be helpful.

[Cristiano Amon, President & CEO at Qualcomm]

Hey, Raj, thanks for the question. We have been talking about the framework of our relationship with Samsung and we have been executing multi year, multi generation agreement with Samsung and we have defined the new baseline of our share in the order of 75%. Anything above that is upside. So that's our planning assumption. And when we outperform, I think we end up you started to see what you saw in Galaxy S25.

[Cristiano Amon, President & CEO at Qualcomm]

Competing against the Samsung own platform is nothing new for Qualcomm. We've been doing that for decades. But I think historically, we have seen a relationship with Samsung continue to move up to higher level of share and that's the baseline assumption. 75% is the baseline. That's the contract to a share everything above that is upside.

[Ross Seymore, Managing Director at Deutsche Bank]

Thank you for that color. I guess as a follow-up and it probably would align to that also within handsets. You've talked about at least the premium tier flagship tier of having roughly double digit ASP or content increases going forward with all the capabilities that you're offering. Does that still hold true? Does it accelerate decelerate with the x85? Just any update on that would be great.

[Akash Palkhiwala, CFO & COO at Qualcomm]

Yes. So if you think about our Android business in the fiscal twenty twenty five, it grew over fiscal twenty twenty four by approximately 10%. So that is higher than the target we'd set at Investor Day. And it's a reflection of the strength of our roadmap, our competitive positioning and the fact that this is a market where the volume is moving up to higher tiers where Qualcomm has a very strong position. The other thing I just want to highlight is we did give a metric both in Mayan and Cristiano's prepared remarks is over the last two years kind of our non Apple revenue stream in QCT has grown annually at more than 15%.

[Akash Palkhiwala, CFO & COO at Qualcomm]

So that should give you a key benchmark as you think about how the company is positioned to grow going forward as well. And this aligns with the fiscal twenty twenty nine targets we set at Investor Day.

[Operator]

The next question comes from the line of Tal Liani with Bank of America. Please proceed with your question. Tyler, your line is live for question. Perhaps you're on mute.

[Tal Liani, Technology Analyst at Bank of America]

About China handsets. The proportion of China is going up. And if Samsung you said you're working with an assumption of 75 for Samsung. So if Samsung is going to go down from 100% for the Galaxy to 75%, China would further go up in percentage of QCT revenues. How do you see the China growth trends when it comes to the domestic market and international markets?

[Tal Liani, Technology Analyst at Bank of America]

What's the outlook from your perspective? And what's the risk of competition within the Chinese market? Thanks. I have just a follow-up question on margins, but I'll keep it separate.

[Akash Palkhiwala, CFO & COO at Qualcomm]

Tal, our position in China continues to be very strong. I think the evidence of that is the announced agreement that we announced with Xiaomi during the quarter. This is a multiyear agreement for premium phones with increasing volumes every year and they're going to use our chip for launches within China and globally as well. In addition, they'll also be the first OEM to launch with our next Snapdragon eight Elite chip, which comes out over the next couple of months. And the relationship really has expanded over the last couple of years.

[Akash Palkhiwala, CFO & COO at Qualcomm]

We've gone from phones to automotive. They introduced smart glasses with our chips, wearables, tablets. So it's a very broad relationship and it's just an example of relationships we have with other Chinese OEMs as well. So you should consider this as a very well positioned sustained business for us. Within Samsung, as you can see in fiscal in 2026, they launched most of their devices with hard chip, but they did launch Flip with their own.

[Akash Palkhiwala, CFO & COO at Qualcomm]

And so we're slightly below 100% share. And as we go to next year, I think our agreement as Cristiano outlined carries over and we're in a very good position to maintain our scale there as well.

[Cristiano Amon, President & CEO at Qualcomm]

Let me just add add a different perspective. So I'm going to agree with Akash, but I'll provide probably a comment of questions that we usually we don't get. Look, have been doing business in China for thirty years. We actually started down at the three gs. And I think what we learned by doing business in China, we actually learned how to move at China's speed.

[Cristiano Amon, President & CEO at Qualcomm]

And I think if you look at the position in Qualcomm in China, they only improve over the years. And as Akash outlined, not only we've been well positioned in the phone business, we're well positioned with some of the fastest growing OEMs in the auto business and that is expanding now into industrial, into robotics and other areas. So another way to look into this is Qualcomm has became a very competitive company and learned how to compete in China and have been serving well. I think the market we expected to that to continue to be the case.

[Tal Liani, Technology Analyst at Bank of America]

Got it. Maybe just a question on margins, a quick one. I see that when I look at gross margin, operating margin, I see that there is kind of you managed to maintain a very healthy operating margin despite the fluctuations in Apple revenues. So I just want to ask you a question I'm getting from investors quite often. What are the implications of the decline in Apple?

[Tal Liani, Technology Analyst at Bank of America]

What are the implications on margins? Are they positive or negative? Thanks.

[Akash Palkhiwala, CFO & COO at Qualcomm]

Yes. I think we're very happy with the margin profile of the business. I mean, we will be at close to 30% margin this year, which is the target we have set for the long term. As you look forward, the growth opportunity that we have in auto IoT far exceeds the scale of the Apple revenue. So I think we have the ability to continue to grow revenue and manage the margin profile as a result of it.

[Akash Palkhiwala, CFO & COO at Qualcomm]

And so no change to our long term target margin versus what we've said in the past.

[Operator]

Thank you. Our last question comes from the line of Ben Reisis with Melius Research. Please proceed with your question.

[Ben Reitzes, MD & Head - Technology Research at Melius Research LLC]

Hey guys, thanks a lot. I appreciate it. I wanted to ask about the data center. You're buying AlphaWave for 2,400,000,000.0 You have big ambitions there, it sounds like, for FY 2028. What is what are your thoughts on doing having more of a tuck in acquisition strategy there or even going bigger to get big fast and get a hold of customers if you have such great IP.

[Ben Reitzes, MD & Head - Technology Research at Melius Research LLC]

I was just wondering if you kind of give your a little bit more of the strategy. Is it more alpha waves coming or would you ever consider a bigger acquisition? Thanks.

[Cristiano Amon, President & CEO at Qualcomm]

Thanks Ben for your question. Look, at this point, we're very focused on actually driving Alpha Wave to closure and building our product roadmap. I think we feel that it provides the IP that is complementary to what we have and allow us to build a competitive position. This is a new initiative for Qualcomm as I outlined. And like we have done for the rest of our business, as opportunity becomes available, we're always going to be looking how to complement the roadmap.

[Cristiano Amon, President & CEO at Qualcomm]

Right now, we're really focused on driving Alpha Wave to closure.

[Ben Reitzes, MD & Head - Technology Research at Melius Research LLC]

All right. Thanks. And can I just ask a quick follow-up on your comments around Gemini and Galaxy AI use in the Android area? And just can you just draw that out a little more? Obviously, there's a perception that the Apple products are a little behind in AI.

[Ben Reitzes, MD & Head - Technology Research at Melius Research LLC]

And what that means for you over the long term, whether you're really optimistic about that, maybe even past the your fiscal first quarter and just any more color there? Thanks.

[Cristiano Amon, President & CEO at Qualcomm]

Yes. Consistent to what we have been saying, we're to see AI use cases on phones to gain traction. And there's also another interesting data point. I think if you look of the overall share of AI models, you see Gemini actually increasing dramatically over other models. We have seen I think the advantage of the Android ecosystem in terms of majority of AI as more and more use cases become agentic or you started to see AI as part of the applications.

[Cristiano Amon, President & CEO at Qualcomm]

I expect that it creates excitement about the Android ecosystem, expand its SAM, any drives, upgrade cycles. Those are all positive things from a mobile business. So I will think that what AI is doing is making connectivity more relevant again, because of voice utilization is driving more computing, more capable devices and exactly changing the use cases. And the rate of utilization, it's very encouraging what I said in the call about 3x between Galaxy S24 and Galaxy S25 and I think I expect that to continue to accelerate.

[Operator]

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

[Cristiano Amon, President & CEO at Qualcomm]

Thank you all for attending the call. I'd like to thank our employees, our partners and we appreciate following Qualcomm. We'll continue to execute on our strategy. We feel that the company is on the right trajectory, especially as we look for growth and diversification beyond handsets and AI continue to be a great opportunity for us. Thank you very much.

[Operator]

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Participants

Executives

• Cristiano Amon, President & CEO
• Akash Palkhiwala, CFO & COO

Analysts

• Mauricio Lopez-Hodoyan, VP - IR at Qualcomm
• Joshua Buchalter, Director - Equity Research at TD Cowen
• Samik Chatterjee, MD & Equity Research Analyst at J.P. Morgan
• Stacy Rasgon, MD & Senior Analyst at AB Bernstein
• Chris Caso, Managing Director at Wolfe Research LLC
• Ross Seymore, Managing Director at Deutsche Bank
• Tal Liani, Technology Analyst at Bank of America
• Ben Reitzes, MD & Head - Technology Research at Melius Research LLC