Qualcomm (QCOM) will report its third-quarter fiscal 2026 results on July 29, and the recent weakness in QCOM stock presents an attractive buying opportunity for long-term investors ahead of earnings. Shares have fallen nearly 36% from their recent high as valuation concerns and challenges in the consumer handsets market have weighed on sentiment.
Much of the decline follows a solid rally that pushed Qualcomm's valuation higher. At the same time, strong demand for AI infrastructure and high-bandwidth memory has tightened memory supply and increased component costs for smartphone manufacturers. In response, several Android OEMs, particularly in China, have reduced production plans and focused on clearing existing inventory instead of placing new orders.
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These headwinds were already evident during Qualcomm’s second quarter and are expected to weigh on fiscal third-quarter results as well. Qualcomm's CDMA Technologies (QCT) business has seen Android shipments remain well below underlying consumer handset demand, reflecting the inventory correction underway across the Chinese smartphone market.
However, the most important takeaway is that management expects this weakness to bottom during the fiscal third quarter, with revenue from Chinese Android customers returning to sequential growth in the following quarter. If that outlook holds, Qualcomm could be approaching an inflection point just as investor expectations have become increasingly conservative.
More importantly, Qualcomm's long-term growth story extends well beyond smartphones. The company continues to diversify into automotive, IoT, and data center markets that offer substantially larger long-term growth opportunities. As these businesses scale, Qualcomm should become less dependent on smartphone cycles while benefiting from higher-value AI workloads across connected devices.
With expectations already reset following the stock's sharp correction, Qualcomm's upcoming earnings report could serve as a catalyst if management delivers signs of improving handset demand and continued momentum in its fast-growing AI and automotive businesses.
www.barchart.com Lower China Shipments to Hurt Qualcomm’s Growth in Q3
Qualcomm is expected to report weaker third-quarter results, as lower QCT shipments to Chinese customers will continue to weigh on results. Nonetheless, Qualcomm’s Q3 could continue to benefit from the expansion of its automotive and IoT businesses.
Management has guided third-quarter revenue to $9.2 billion to $10.0 billion, representing both sequential and year-over-year (YoY) declines. Qualcomm generated $10.6 billion in revenue during the second quarter of the current fiscal year and $10.4 billion in the same quarter last year.
Qualcomm's QCT segment is expected to generate revenue of $7.9 billion to $8.5 billion. Within QCT, handset revenue is projected to be approximately $4.9 billion, down sharply from $6.3 billion a year ago. The decline primarily reflects lower shipments to Chinese OEMs. Further, the business faces tough YoY comparisons. Notably, QCT's handset business benefited from exceptionally strong demand for premium smartphones powered by Qualcomm's Snapdragon 8 Elite platform in the prior year quarter.
Despite weakness in smartphones, Qualcomm's focus on diversification will support its top line. The QCT IoT business is projected to deliver YoY growth, led by healthy demand across industrial and consumer applications.
Meanwhile, Qualcomm's automotive business continues to outperform. Following solid performance in Q2, management expects automotive revenue to grow by approximately 50% YoY in the third fiscal quarter, highlighting increasing adoption of its Snapdragon Digital Chassis platform.
Qualcomm Technology Licensing (QTL) is expected to generate revenue between $1.15 billion and $1.35 billion. The forecast implies modest YoY growth.
With revenue under pressure, Qualcomm expects adjusted earnings per share (EPS) to range between $2.10 and $2.30, down from $2.77 in the prior-year quarter.
Wall Street analysts are even more cautious, with consensus estimates calling for earnings of $1.54 per share, well below last year's level.
Here’s Why to Buy QCOM Stock
Despite near-term challenges, Qualcomm's long-term outlook remains compelling. QCOM has evolved into a diversified AI and semiconductor leader, expanding into high-growth markets such as automotive, IoT, robotics, and AI data centers.
It now targets $40 billion in non-handset revenue and over $15 billion in data center revenue by fiscal 2029. Automotive is a key growth driver, with a $65 billion design-win pipeline and a $10 billion revenue goal by 2029.
Overall, Qualcomm has significant opportunities in agentic AI, intelligent edge devices, autonomous driving, industrial AI, and 6G. Backed by these growth initiatives, management expects adjusted EPS to exceed $18 by fiscal 2029.
Although Wall Street analysts currently rate QCOM stock a consensus “Moderate Buy,” the recent share-price pullback has eased valuation concerns. At the same time, the company's diversification strategy strengthens its long-term investment case.
www.barchart.com On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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