Should You Buy Qualcomm Stock Before Its Nov. 4 Report?

Qualcomm (QCOM +1.45%) shares slid 11% on Oct. 30 to close at $164.79. The company didn’t release any news of its own that day. Instead, it was caught in a broad chip sell-off after Intel forecast less revenue in the fourth quarter than in the third and warned the PC slowdown might last until at least mid-2027.

The PHLX Semiconductor Index lost about 7% in the same session.

Shares sit near $167 as I write, about a third under the $251.02 record close they set on May 29. That peak came after the stock more than doubled from its early-April low, so shares have swung a lot in a short time.

Now Qualcomm releases fiscal fourth-quarter results after the close on Wednesday, Nov. 4. Is the stock worth buying before the report? I’d say the September quarter matters less than what management says about the December quarter.

Image source: The Motley Fool.

Phones are still shrinking

Qualcomm’s handset business has been slipping all year. Handset chip revenue was still up 3% year over year in the three months ending Dec. 28, 2025, Qualcomm’s fiscal first quarter of 2026. Then it dropped 13% in the March quarter and 20% in the June quarter, to $5.1 billion.

Memory is the biggest issue. Qualcomm’s latest quarterly filing says it expects tight memory supply, and the price hikes that went with it, to hit demand from several phone makers.

Apple (AAPL -1.90%) is the other drag. Qualcomm now expects its share of new iPhone launches to come in well below its earlier 20% estimate, a gap management linked partly to its own supply constraints. And it forecast Apple revenue dropping around 50% from the September quarter to the December quarter.

PCs are a smaller part, but Intel‘s warning still matters. Qualcomm’s PC chips are in its internet of things (IoT) category, where revenue rose 9% year over year in the June quarter. A softer PC market might slow one of the chipmaker’s growing businesses.

In all, Qualcomm guided for $9.7 billion to $10.5 billion in fiscal fourth-quarter revenue and $2.05 to $2.25 in non-GAAP (adjusted) earnings per share. At the midpoints, that’s around 10% and 28% under the year-ago quarter.

Revenue from two data center deals is nearly here

The more interesting piece of Wednesday’s report will probably be the outlook. Qualcomm has custom chip deals with two very big cloud computing companies.

Revenue from both should begin in the December quarter, according to chief financial officer Akash Palkhiwala. “As you know, the December quarter is right there. And so we do have POs from these engagements, and so we’ve already started wafers,” he said on the July earnings call, referring to purchase orders.

Management targets over $15 billion in data center revenue by fiscal 2029. Of course, that’s a target.

But the auto business shows what a ramp can look like. Automotive sales hit $1.6 billion in the June quarter, a record and 61% higher than a year before. This growth rate climbed from 38% in the March quarter and 15% in the December quarter.

Profitability is the trade-off. Qualcomm’s chip segment had a pre-tax margin of 31% in the December quarter. That slipped to 27% in the March quarter and 26% in the June quarter, 4 percentage points lower than a year earlier, because higher wafer and memory costs came before Qualcomm’s price hikes could catch up.

Wednesday’s guidance for the December quarter should show if Android growth and the first sales from the two custom chip deals can make up for the Apple drop. That figure might matter more to the stock than anything Qualcomm earned from July through September.

QCOM – Qualcomm

$164.43+$2.35 (+1.45%)

NASDAQ · As of 4:00 PM ET 11/03/26

Is the stock a buy before Wednesday?

At around 17 times expected fiscal 2027 earnings, Qualcomm trades a little under the S&P 500‘s forward price-to-earnings ratio of about 19. That multiple arguably doesn’t assume much data center success. If anything, the market seems to be pricing Qualcomm more like a phone-chip maker that’s losing Apple’s business.

Even so, the two data center deals haven’t shown up in reported revenue yet. Purchase orders and wafer starts are promising, but I’d rather judge the business by the December quarter’s actual sales from those deals, which Qualcomm won’t report until early 2027.

I’m in no rush to buy before Wednesday. If the stock gets cheaper as I wait for those sales numbers, I’m OK with it.

Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.