Qualcomm outlines $22B fiscal 2029 automotive and IoT revenue target as data center ramp accelerates

Earnings Call Insights: QUALCOMM Incorporated (QCOM) Q4 2025

MANAGEMENT VIEW

* CEO Cristiano Amon reported, "In fiscal Q4, we delivered another strong quarter with revenues of $11.3 billion and non-GAAP earnings per share of $3, both of which exceeded the high end of our guidance range." Amon highlighted, "QCT revenues of $9.8 billion, up 9% sequentially were driven by strong end customer demand for Snapdragon-powered premium tier Android handsets, continued traction for automotive Snapdragon Digital Chassis and strength in IoT across industrial, Wi-Fi 7 access point, 5G fixed wireless and smart glasses."
* Amon noted, "All 3 QCT revenue streams exceeded our expectations including record automotive quarterly revenues in excess of $1 billion." He added, "Fiscal '25 non-GAAP revenues of $44 billion were up 13% year-over-year, with record QCT annual revenues of $38.4 billion, up 16% year-over-year, including automotive and IoT revenue growth of 36% and 22% year-over-year, respectively."
* The CEO emphasized the launch of Snapdragon 8 Elite Gen 5, new AI PCs, and significant expansion in smart glasses and automotive. Notably, he said, "We now expect approximately 150 designs to be commercialized through 2026 and remain optimistic about the continued momentum for Snapdragon-powered AI PCs."
* Several strategic highlights included the acquisition of Arduino, launch of the Snapdragon Ride Pilot for automated driving, expanded Google collaboration, and entry into AI data center solutions with the AI200 and AI250 SoCs.
* CFO Akash Palkhiwala stated, "We are pleased with our strong non-GAAP performance with revenues of $11.3 billion and EPS of $3, both of which were above the high end of our guidance." He added, "QTL revenues of $1.4 billion and EBT margin of 72% were above the midpoint of our guidance, driven by slightly higher handset units."
* Palkhiwala also noted, "We generated record free cash flow of $12.8 billion. And consistent with our commitment, we returned nearly 100% to stockholders through repurchases and dividends through the year."

OUTLOOK

* Palkhiwala provided, "In the first fiscal quarter, we expect to deliver record results with revenues in the range of $11.8 billion to $12.6 billion and non-GAAP EPS of $3.30 to $3.50. In QTL, we estimate revenues of $1.4 billion to $1.6 billion and EBT margins of 74% to 78%. In QCT, we expect record revenues of $10.3 billion to $10.9 billion and EBT margins of 30% to 32%."
* The company expects "record QCT handset revenues with low teens percentage growth sequentially, primarily driven by new flagship Android handset launches powered by Snapdragon."
* Automotive revenues are expected to remain "flat to slightly up on a sequential basis."
* The company reaffirmed its "$22 billion fiscal '29 revenue target across automotive and IoT," citing strong growth rates and new customer engagements as supportive factors.

FINANCIAL RESULTS

* Qualcomm reported "revenues of $11.3 billion and non-GAAP earnings per share of $3" for Q4 2025. QCT delivered revenues of $9.8 billion and EBT of $2.9 billion. QCT EBT margin was cited as 29%.
* QTL revenues were $1.4 billion with an EBT margin of 72%. QCT handset revenues were $7 billion, up 14% year-over-year, and QCT IoT revenues were $1.8 billion, up 7% year-over-year.
* Automotive revenues exceeded $1 billion, representing 17% year-over-year growth.
* The company highlighted a noncash charge of $5.7 billion in the fourth quarter related to deferred tax assets due to new tax legislation, which impacted GAAP but not non-GAAP results.

Q&A

* Joshua Buchalter, TD Cowen: Asked about data center strategy and specifics on AI200/250. CEO Amon described a focus on "power-efficient CPU" and a "new architecture dedicated for inference." He said, "We're excited about what we're doing...we're pleased with what we're seeing."
* Buchalter followed up on handset market share with a focus on major Android customers. Amon responded, "The premium tier is expanding...our relationship with Samsung...the new baseline is about 75% share. When we out-execute, sometimes we get more than 75%, on Galaxy S25, we got 100%."
* Samik Chatterjee, JPMorgan: Inquired about data center cost performance and revenue implications of HUMAIN engagement. Amon indicated, "We expect data center products to start leading to a revenue ramp beginning in fiscal '28...as a result of the HUMAIN engagement...pulling this forward into fiscal '27."
* Chatterjee asked about sequential Q1 trends and Android customer share. Palkhiwala replied, "We're not guiding beyond first quarter at this point...the business momentum is strong."
* Stacy Rasgon, Bernstein: Asked if non-Apple QCT growth was content driven. Palkhiwala confirmed, "Content continues to grow as we deliver more and more capable chips...those are the 2 primary drivers of kind of the long-term trend of our handset business."
* Christopher Caso, Wolfe Research: Probed AI data center architecture and handset ASP trends. Amon said, "We're approaching this thinking about what the future architecture should look like...maybe an architecture that is beyond the GPU and what you've traditionally been doing."
* Tal Liani, BofA: Queried QCT outperformance and guidance breakdown. Palkhiwala detailed, "In automotive, we had a record quarter...we are guiding flat to slightly up...IoT is similarly positioned...within handsets, the upside...is really the success of our launch of our new chip."
* Christopher Muse, Cantor Fitzgerald: Asked about QCT EBT margins and investments. Palkhiwala linked this to "investing in the data center area...data center is incremental to the investment profile that we have."
* Benjamin Reitzes, Melius Research: Sought clarity on data center opportunity size. Amon stated, "Success in this area...presents to us a potential multibillion-dollar revenue opportunity in a couple of years."

SENTIMENT ANALYSIS

* Analysts expressed some concern over data center specifics, Android market share, and the revenue ramp from new initiatives, but generally acknowledged strong performance and guidance. The tone was neutral to slightly positive, with questions focused on sustainability and timing of growth.
* Management maintained a confident and optimistic tone in the prepared remarks, emphasizing strong results, innovation, and momentum in multiple business lines. In the Q&A, executives reiterated confidence but were cautious about providing specifics beyond the near-term guidance, occasionally deflecting questions about future quarters or customer details.
* Compared to the previous quarter, both analysts and management showed slightly increased confidence, particularly about new revenue streams and the acceleration of the data center opportunity.

QUARTER-OVER-QUARTER COMPARISON

* The company reported higher QCT and overall revenues, with automotive and IoT growth rates accelerating compared to Q3.
* Guidance for Q1 2026 reflects higher revenue and EPS targets than the previous quarter's Q4 guidance, with expected record results.
* Strategic focus shifted toward data center acceleration, new product launches in AI PCs and smart glasses, and expanded automotive partnerships, compared to the prior quarter's emphasis on foundational partnerships and platform expansion.
* Management's tone in Q4 was more forward-looking and confident, highlighting the pull-forward of data center revenue to fiscal '27 and continued leadership in premium Android and automotive.
* Analysts continued to probe for detail on data center and Android share but appeared more encouraged by recent results and updated guidance.

RISKS AND CONCERNS

* Management referenced ongoing negotiations with Huawei for licensing, with Alexander Rogers stating, "No, we actually don't have an update now. Discussions are still underway, really nothing substantive to say beyond that."
* The company acknowledged potential noise around Android customer share, particularly with Samsung, but reiterated baseline assumptions for planning.
* Investment in new business areas, such as the data center, was cited as a factor in margin trends and operating expenses.
* Seasonality and changes in handset share at major customers remain areas of analyst focus and potential volatility.

FINAL TAKEAWAY

Qualcomm's fourth-quarter call presented a confident outlook underpinned by strong results in premium handsets, automotive, and IoT, while emphasizing momentum in AI PCs and the data center. Management reaffirmed its $22 billion fiscal 2029 target for automotive and IoT revenues, highlighted a pull-forward in expected data center ramp to fiscal 2027, and detailed new product launches and strategic acquisitions. The company positioned itself as a leader in edge AI and diversified growth, with a robust product pipeline and partnerships supporting continued expansion.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/qcom/earnings/transcripts]

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