Wireless chipmaker Qualcomm (NASDAQ: QCOM) reported revenue ahead of Wall Street’s expectations in calendar Q3 2026 (fiscal Q4 2026), but revenue fell by 8.4% year on year to $10.32 billion. Revenue guidance for next quarter was $10.8 billion at the midpoint, 2.6% above analysts’ consensus estimates. Its non-GAAP profit of $2.17 per share was in line with analysts’ consensus estimates.
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Qualcomm (QCOM) Q3 CY2026 highlights:
- Revenue $10.32 billion vs S&P analysts’ consensus estimates of $10.16 billion (8.4% year-on-year decline, 1.6% beat)
- Adjusted EPS $2.17 vs S&P analysts’ consensus estimates of $2.16 (in line)
- Adjusted operating income $2.77 billion vs analysts’ consensus estimates of $2.72 billion (26.8% margin, 1.6% beat)
- Revenue guidance $10.8 billion at the midpoint for Q4 CY2026, above analysts’ consensus estimates of $10.52 billion
- Adjusted EPS guidance $2.25 at the midpoint for Q4 CY2026, below analysts’ consensus estimates of $2.29
- Operating margin 13.1%, down from 25.9% in the same quarter last year
- Free cash flow margin 17.7%, down from 31.8% in the same quarter last year
- Inventory days outstanding 155, down from 167 in the previous quarter
- Market capitalization $175.6 billion
Revenue growth
A company’s top-line performance is one signal of its overall business quality. Strong growth can indicate it’s riding a successful new product or emerging trend. Qualcomm’s annualized revenue growth rate of 5.2% over the last two years was sluggish for a semiconductor business. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.
Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore’s Law) could make yesterday’s hit product obsolete today. Qualcomm’s annualized revenue growth of 5.2% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak. 
This quarter, Qualcomm’s revenue fell by 8.4% year on year to $10.32 billion but beat Wall Street’s consensus estimates by 1.6%. Despite the beat, the drop in revenue could mean that the current downcycle is deepening. Management is guiding for an 11.9% year-on-year decline in revenue next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 3.5% over the next 12 months, according to S&P, a slight deceleration versus the last two years. This underwhelming projection indicates its products and services will face some demand challenges.
Product demand and outstanding inventory
Days inventory outstanding, or DIO, is an important metric for chipmakers, as it reflects a business’s capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Qualcomm’s DIO came in at 155, which is 18 days above its five-year average. These numbers suggest that despite the recent decrease, the company’s inventory levels remain above historical levels.
Key takeaways from Qualcomm’s Q3 results
Materially improved inventory levels and a revenue outlook for next quarter above Wall Street’s consensus estimates gave Qualcomm’s report some key positives. But the market appeared to be hoping for more, as shares tumbled 8.7% to $160.85 immediately after the release.
When assessing Qualcomm at its current price, the latest quarter matters, but not as much as longer-term business quality and valuation. Read the full research report here (it’s free).
