"Storage shortage" looming! Qualcomm's earnings guidance falls short of expectations, causing a 10% plunge in stock price after hours

U.S. stocks closed Wednesday after-hours with major semiconductor giant Qualcomm reporting better-than-expected fiscal first quarter results for FY2026, but the company’s outlook fell short of market expectations due to a global storage supply shortage.

As a result, Qualcomm’s stock price briefly plummeted 10% in after-hours trading on Wednesday. During regular trading hours, the stock rose 1.16%.

The earnings report showed that Qualcomm’s revenue for the first quarter was $12.25 billion, up 5% year-over-year, slightly exceeding market expectations of $12.21 billion; adjusted net income was $3.781 billion, down 1% year-over-year; adjusted earnings per share were $3.50, up 3%, compared to an expected $3.41.

In the first quarter, Qualcomm’s mobile business revenue reached $7.82 billion, a 3% increase year-over-year. In contrast, the company’s smaller business units grew at a faster rate.

The Internet of Things (IoT) business revenue grew 9% year-over-year to $1.69 billion. This division’s products include industrial chips as well as chips powering Meta Ray-Ban smart glasses.

Additionally, the automotive business revenue surged 15% year-over-year to $1.1 billion. This division supplies chips to automakers like Toyota.

Storage Chip Shortage Dampens Performance Guidance

Looking ahead, Qualcomm expects second-quarter revenue to be between $10.2 billion and $11 billion; adjusted earnings per share between $2.45 and $2.65. Meanwhile, analysts surveyed by LSEG forecast Qualcomm’s second-quarter revenue at $11.11 billion and earnings per share at $2.89.

Qualcomm executives stated in an interview that, the primary reason for the weaker-than-expected outlook is the global storage chip shortage. Currently, data center storage demand is strong, with a large number of orders squeezing the capacity for memory needed in smartphones and other consumer electronics.

Qualcomm is one of the world’s largest suppliers of smartphone chips, serving major Android phone manufacturers and iPhone producer Apple. Its earnings report is also seen as an important indicator of supply and demand dynamics in the personal electronics semiconductor industry.

Qualcomm’s main customers—smartphone manufacturers—procure storage chips independently and pair them with Qualcomm’s processors and modems. These customers are closely monitoring storage procurement and inventory levels and adjusting based on supply conditions.

Qualcomm CFO Akash Palkhiwala said that, the gap between the outlook and market expectations is due to memory shortages.

Qualcomm CEO Cristiano Amon stated in an interview, “We are beginning to realize that memory will determine the scale of the mobile market.”

Amon added that smartphone demand remains strong, and the market is in an upgrade cycle, but he expects Qualcomm to face challenges in smartphone supply.

He mentioned that the company is unsure whether manufacturers will raise prices, but expects Qualcomm’s customers to focus more on high-end models, as these can better absorb the cost pressures from rising memory prices compared to entry-level phones. Amon also noted during the earnings call that Qualcomm is most competitive in the high-end smartphone segment.

“We believe this is an industry-wide issue that will affect all products in the consumer electronics field,” Amon said.

According to data from market research firm Counterpoint Research, the global shipment of high-end smartphone chips is expected to decline by 7% in 2026, partly due to rising memory chip prices.

(Source: Cailian Press)