Qualcomm Cuts Q2 Guidance as AI Data Centers Drain Smartphone Memory
In brief
- Qualcomm beat Q1 fiscal 2026 earnings but guided Q2 revenue below consensus, triggering 11% share decline
- AI data centers redirecting critical memory chip supplies away from smartphone makers, CEO Cristiano Amon said
- Chinese OEMs face hardest impact; Qualcomm plans double-digit price increases effective September 1, 2026
Earnings Beat, Guidance Miss
Qualcomm's adjusted earnings per share for fiscal Q1 2026 came in at $3.50, beating the $3.41 consensus estimate. Revenue hit $12.25 billion against expectations of $12.21 billion. The beat looked solid on paper. But the forward outlook told a different story.
For Q2 fiscal 2026, Qualcomm guided revenue between $10.2 billion and $11 billion, well below Wall Street expectations of $11.11 billion. The adjusted EPS forecast of $2.45 to $2.65 landed even further below the $2.89 consensus. Shares fell 11% in after-hours trading.
Memory Shortage Reshapes Supply Chains
CEO Cristiano Amon didn't mince words about the cause. He pointed to the massive buildout of artificial intelligence infrastructure as the primary driver, with data centers now consuming enormous quantities of memory chips that would have otherwise gone to smartphone manufacturers. Smaller Chinese OEMs faced the brunt of the shortage—they lack the purchasing power and supply chain leverage that giants like Apple and Samsung command, leaving them unable to secure adequate inventory.
"Qualcomm CEO Cristiano Amon pointed directly at surging demand from AI data centers as the primary driver. The massive buildout of AI infrastructure requires enormous quantities of memory chips, and that demand has essentially redirected critical memory supplies away from the smartphone sector." — Qualcomm CEO Cristiano Amon
Reduced production and lower inventory levels among these OEMs translate directly into fewer Qualcomm chips being shipped. The memory shortage is expected to persist through a significant portion of fiscal 2026.
Price Pressure Ahead
Qualcomm has announced plans for double-digit price increases effective September 1, 2026, specifically tied to rising memory costs. Higher component costs tend to compress margins across the supply chain. If smartphone prices rise meaningfully, emerging markets could see dampened unit sales growth.
Qualcomm has been working to diversify beyond smartphones into automotive, IoT, and PC chips, but the handset business remains its primary revenue source. The company's weak Q2 outlook signals that diversification hasn't yet offset the smartphone sector's vulnerability to memory-supply shocks—and AI's growing appetite for chips shows no signs of slowing.
