Qualcomm Incorporated’s QCOM licensing business has been under some pressure in recent quarters. In the third quarter of fiscal 2026, Qualcomm Technology Licensing (QTL) revenues fell 3% year over year to $1.28 billion. EBT declined 6% to $881 million, while the EBT margin dropped to 69% from 71% a year earlier.
However, the major chip producer recently saw a positive development in the QTL segment. The company announced the renewal of its global patent license agreement with Apple. The renewed agreement will become effective on April 1, 2027. The financial terms of the deal are not disclosed.
Qualcomm boasts a robust patent portfolio covering technologies used across 3G, 4G and 5G wireless systems. This was critical for the QTL segment, as the renewal gives Qualcomm more visibility into its licensing business and will drive royalty revenue collection beyond the expiration of the current agreement. The timing of the agreement is also important. Qualcomm is witnessing lower content in Apple’s semiconductor business, which is impacting revenues in the QCT segment. The company stated that QCT’s share of the upcoming iPhone launch is expected to be materially below its earlier 20% assumption. This will cause a major reduction in Apple-related revenues.
Amid this backdrop, Apple’s renewal for the wireless portfolio of QTL segment is a tailwind for the company. However, it is to be noted that the renewal does not imply an immediate acceleration in QTL revenues. QTL royalties’ revenues are still closely linked to the smartphone market. Weakness in the handset market continues to put pressure on the business. The company has projected a cautious outlook for the fourth quarter of 2026. Qualcomm’s fiscal fourth-quarter guidance reflects this cautious outlook. The company expects QTL revenues of $1.2-$1.4 billion, with an EBT margin of 68-72%.
Recovery in the QTL business in the long run will depend on Qualcomm’s capability to reduce its reliance on the cyclical smartphone market and expand into new high-growth markets, such as Automotive, IoT, AI and data center businesses.
How Are Other Wireless IP Providers Performing?
InterDigital IDCC continues to broaden its licensing base across smartphones, streaming, cloud services, and IoT. The company maintains one of the industry's strongest patent portfolios across wireless, video and artificial intelligence technologies. The company now holds more than 100 leadership positions across global standards organizations and InterDigital remains the only U.S. company with multiple chair positions within 3GPP. During the second quarter of 2026, IDCC reached a milestone agreement with Amazon covering devices and services, including Prime Video, with final financial terms to be determined through binding arbitration. Eight of the 10 largest smartphone manufacturers, such as Apple, Samsung, Xiaomi, OPPO, vivo and Honor, are IDCC’s licensees.
In the second quarter of 2026, Ericsson’s ERIC reported sales declined 6% year over year to SEK 52.7 billion, while organic sales fell 1%, mainly because of lower IPR licensing revenues. Ericsson’s licensing business is showing some signs of improvement despite recent volatility. The company reported that it has reached an agreement with a top-10 smartphone vendor. Major smartphone players, including Apple and Samsung, are Ericsson’s licensees.
QCOM’s Price Performance, Valuation & Estimates
Qualcomm shares have gained 14.5% over the past year compared with the industry’s growth of 95.3%.
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Going by the price/earnings ratio, the company's shares currently trade at 19.37 forward earnings, lower than 30.11 for the industry.
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Earnings estimates for fiscal 2026 and 2027 have decreased over the past 60 days.
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Qualcomm currently has a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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