Qualcomm said on Wednesday that revenue from its automotive chip business jumped 89% year over year to a record $1.99 billion in the fiscal fourth quarter ended Sept. 27, while handset chip revenue dropped 26% to $5.14 billion.

The automotive result exceeded analyst expectations of $1.66 billion and compared with $1.05 billion in the year-earlier quarter. Full-year automotive revenue grew 52% to $6 billion — a business that now contributes roughly a fifth of the company's quarterly revenue as Qualcomm works to build revenue beyond smartphones.

Handsets remain Qualcomm's largest business. Phone chip sales fell to $5.14 billion from $6.96 billion a year earlier, below estimates of $5.21 billion, and full-year handset revenue declined 13% to $24.07 billion. Qualcomm said rising memory prices have pushed up costs for phone makers and weighed on demand, while Android shipments in the Chinese market have dropped. The company still anticipates the handset market to remain flat in 2027. With handsets still bringing in roughly half of the company's quarterly revenue, the segment's trajectory remains the biggest swing factor in Qualcomm's overall results.

Elsewhere in the portfolio, the Internet of Things segment produced $1.89 billion in quarterly revenue, up 4%. The QCT chip unit posted $9.02 billion, down 8%, and licensing revenue from the QTL segment fell 7% to $1.3 billion. Total GAAP revenue was $10.32 billion for the quarter and $43.12 billion for fiscal 2026.

Quarterly GAAP net income was $1.25 billion, compared with a loss of $3.12 billion a year earlier. GAAP earnings per share for the full year came to $12.70, a figure that includes an income tax benefit of $5.7 billion related to the release of a valuation allowance.

Qualcomm shares fell 7% in after-hours trading on Wednesday and were down about 9% in early trading on Thursday.

Amon reiterates $5 billion data center target for fiscal 2027

"Fiscal 2027 marks the start of our non-handset revenue inflection, including the ramp of our Data Center business," CEO Cristiano Amon said in the company's earnings release.

Non-handset revenues are expected to rise more than 60% year over year, he said, reiterating a fiscal 2027 data center revenue target of $5 billion. Customization and connectivity work accounted for the bulk of the company's $650 million in quarterly data center revenue, Amon added — a run-rate that leaves a steep climb toward the $5 billion full-year target. Qualcomm also announced a multi-generational product agreement with Amazon for AI data centers.

During the quarter, the company renewed long-term QTL license agreements with Apple, Huawei and Transsion. It returned roughly $2 billion to stockholders through $1.01 billion in share buybacks and $987 million in dividends.

Guidance for the first quarter of fiscal 2027 calls for revenue of $10.4 billion to $11.2 billion and non-GAAP EPS of $2.15 to $2.35, a range that includes data center sales for the first time, giving the market its first quarterly checkpoint on the data center ramp.

Rising input costs prompt price increases

Qualcomm said input costs are mounting across wafer fabrication, assembly, test, advanced packaging and memory, and the company is raising its product prices. It said the full benefit will be realized in QCT gross margins only in the second half of fiscal 2027, making that margin line one to watch as fiscal 2027 progresses.

The cost pressure reflects a tightening memory market. According to Cryptopolitan, SK Hynix has sold out of HBM and DRAM chips until 2029 and expects demand for memory to outstrip supply until 2030. Another major HBM supplier, Samsung, forecast in October a record quarterly operating profit of about 107.4 trillion won, roughly $80.2 billion, as AI demands more memory chips than suppliers can produce. The squeeze is running in opposite directions across the industry: memory suppliers are posting record profits while downstream chip and device makers absorb higher costs — the same dynamic Qualcomm blamed for softer handset demand.