Qualcomm Inc (NASDAQ:QCOM) delivered second quarter fiscal 2026 results that were largely in line with Wall Street forecasts, but investors focused on cautious forward guidance and pushed the shares lower. Reported adjusted earnings per share came in at $2.65, beating the consensus by $0.10, while revenue totaled $10.6 billion, narrowly above the $10.58 billion estimate and down 3% from $10.98 billion a year earlier.
The company flagged continued headwinds tied to memory supply constraints that have weighed on handset demand for several original equipment manufacturers. Those constraints were cited as a primary factor behind year-over-year revenue declines and contributed to a conservative outlook for the coming quarter.
Guidance and market reaction
Qualcomm's outlook for the third quarter projects revenue between $9.2 billion and $10 billion, which implies a midpoint of $9.6 billion. That midpoint falls short of the analyst consensus of $10.26 billion. The company also guided adjusted EPS to a range of $2.10 to $2.30, with a midpoint of $2.20, below the $2.43 estimate.
Following the guidance release, the stock declined roughly 4.5% as investors reacted to the lower-than-expected revenue and EPS midpoints for the upcoming quarter.
Segment performance and diversification
Qualcomm highlighted progress in diversification away from its traditional handset revenue base. Automotive revenue reached a record $1.33 billion, up 38% year-over-year. When combined with IoT, automotive and IoT revenues grew 20% year-over-year.
By contrast, handset revenue declined 13% to $6.02 billion, pressured principally by weakness in Chinese markets. Management expects handset revenue from Chinese customers to bottom in the third quarter and then return to sequential growth.
The company’s licensing arm, QTL, generated $1.38 billion in revenue, up 5% year-over-year.
Capital allocation and shareholder returns
During the quarter Qualcomm returned $3.7 billion to shareholders, comprising $945 million in dividends and $2.8 billion in share repurchases. The company also announced a new $20 billion share repurchase authorization.
Management commentary
“We are pleased to deliver results in line with our guidance, reflecting solid execution as we navigate a challenging memory environment,” said Cristiano Amon, President and CEO. “We are in a period of profound industry transformation - the rise of AI agents is reshaping our roadmap across every platform we develop.”
What this means for markets
The quarter illustrated a split performance across Qualcomm’s portfolio: robust growth in automotive and IoT offset by declines in handset revenue driven by supply constraints and regional weakness. The guidance shortfall rather than the reported quarter appears to have been the primary driver of the immediate market reaction.