These 4 Stocks Are Tied to the Smartphone in Your Pocket
Apple (AAPL -0.52%), Qualcomm (QCOM +5.53%), Corning (GLW +2.61%), and Arm Holdings (ARM +4.74%) each collect a share of the money spent on smartphones. Apple sells the phone. Qualcomm supplies chips and patent licenses, Corning makes the glass over the screen, and Arm’s chip designs turn up in almost all smartphones.
But their latest quarterly reports all vary meaningfully. Apple’s iPhone revenue climbed 17% year over year in the September quarter, while Qualcomm’s handset chip revenue dropped 26%. And Corning and Arm both said a softer smartphone market hurt their results.
All four also pointed to the same pressure: memory chips have become much pricier. But I think it matters really differently for each stock.
Image source: Getty Images.
1. Apple’s iPhone is still growing
Apple makes much more money from the phone than the other three do. iPhone sales were around $254 billion for fiscal 2026, which ended Sept. 26. That was 53% of Apple’s revenue and 21% more than a year earlier.
But growth is slowing. iPhone revenue climbed 17% year over year to $57.6 billion in the fiscal fourth quarter, after gaining around 22% in fiscal Q3. And excluding the benefit of tariff refunds, Apple’s gross margin dipped about one point from the June quarter. Management sees it coming in between 45% and 46% in the holiday quarter, mainly because of memory costs.
At roughly $347 as of this writing, Apple trades at about 36 times its expected fiscal 2027 earnings. Investors are paying a premium as its margins fall.
$342.37-$1.80 (-0.52%)
NASDAQ · As of 4:00 PM ET 11/06/26
2. Qualcomm’s handset slide is getting steeper
Qualcomm’s phone business is going the other way. Its handset chip revenue dropped 26% year over year to around $5.1 billion in its fiscal fourth quarter, which ended Sept. 27. It had risen 3% in fiscal Q1, then dropped 13% in Q2 and 20% in Q3. For the full fiscal year, Qualcomm blamed lower shipments to some major phone makers, which cut their build plans as memory got scarcer and pricier.
And Qualcomm expects Apple to rely mostly on its own modems from now on, a change it warns will significantly hit its chip sales.
Of course, Qualcomm still collects from the phone through its patents. It renewed its long-term license with Apple, and licensing kept 70% of its revenue as pre-tax profit in the quarter, versus 24% for the chip business. Meanwhile, auto chip revenue surged 89% to nearly $2 billion.
At roughly $150, Qualcomm trades at about 15 times the earnings it’s expected to report in fiscal 2027. I’d say the price already assumes the handset business keeps shrinking.
QCOM – Qualcomm
$165.41+$8.66 (+5.53%)
NASDAQ · As of 4:00 PM ET 11/06/26
3. Corning: the glass is the smaller business
Corning’s links with Apple stretch back almost 20 years.
“By the end of 2026, all the cover glass for iPhone, including iPhone Duo, and Apple Watch, sold worldwide will be produced at our Harrodsburg, Kentucky facility,” chief financial officer Ed Schlesinger said on Corning’s Oct. 27 earnings call.
Phone glass, though, is in Corning’s glass innovations segment, which also sells glass for TVs and laptops. Segment sales slipped 3% in the third quarter, to about $1.5 billion, and segment net income slid 10%.
Optical communications, meanwhile, grew sales 44% to around $2.4 billion, and Corning’s sales linked to generative AI more than doubled. With shares near $104, Corning trades at about 23 times next year’s expected earnings, a price I think largely depends on fiber.
4. A royalty on nearly every phone
About 43% of Arm’s royalties in the fiscal year ended March 31 came from the main smartphone processors.
In the September quarter, royalty revenue dropped to $670 million, down from $715 million three months earlier, and grew just 8% year over year. Arm said memory prices hit the smartphone market, partly offsetting a doubling in data center royalties.
Around $166 as of this writing, Arm stock trades at about 55 times expected earnings for fiscal 2028, which for Arm ends in March 2028. Investors are probably paying that premium for the data center, where Arm expects Arm-based chips to make up more than 60% of the server market at the largest cloud providers by the end of 2026.
ARM – Arm Holdings
$174.62+$7.90 (+4.74%)
NASDAQ · As of 4:00 PM ET 11/06/26
The one I’d own for the phone
Ultimately, of the four, only Apple reported growing phone sales last quarter.
Sure, about 36 times expected earnings isn’t cheap, and memory costs might pressure Apple’s margins for a while. But Apple sets the device’s price, and it raised iPhone prices in September. Qualcomm is much cheaper, but its handset revenue is still falling.
For the phone itself, I’d consider buying Apple.
Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.