Qualcomm (QCOM) delivered a mixed fiscal third-quarter report on Wednesday, July 29, beating revenue expectations but falling short on earnings per share. The stock tumbled over 11% from its prior close in after-hours trading as investors reacted to a weaker-than-expected profit forecast, accelerating declines in Apple-related revenue, and margin pressures in the company's core handset business—despite a major new BMW chip deal and the completion of its $3.9 billion acquisition of AI-software startup Modular .

The Earnings Report: A Mixed Bag

For the quarter ended June 28, 2026, Qualcomm reported revenue of **$9.95 billion**, coming in at the high end of the company's guidance and above analyst estimates of $9.67 billion . However, adjusted earnings per share of **$2.21** fell just short of the Wall Street consensus of $2.23 .

Segment Performance

The results highlight the company's ongoing transition away from its smartphone-centric past.

• Handsets: Revenue fell 20% year-over-year to $5.1 billion, reflecting a challenging memory chip supply environment and weaker demand in the premium Android segment . CEO Cristiano Amon noted that handset makers were forced to raise prices due to higher memory costs, prompting buyers to look toward lower-end models, which hurt Qualcomm's margins .

• Automotive: Revenue surged 61% year-over-year to a record $1.6 billion, marking the 23rd consecutive quarter of double-digit growth . This segment is a cornerstone of the company's diversification strategy.

• Internet of Things (IoT): Revenue grew 9% to $1.8 billion .

The company's licensing business (QTL) contributed $1.3 billion in revenue, down 3% from the prior year .

The BMW Deal and Modular Acquisition: Strategic Moves

Long-Term BMW Chip Supply Agreement

On the same day as the earnings report, Qualcomm announced a significant long-term deal to supply chips for BMW's future vehicle platforms through the next decade . The agreement covers Qualcomm's Snapdragon Digital Chassis solutions, including processors for digital cockpits, advanced driver-assistance systems (ADAS), and AI accelerators .

The deal expands an existing partnership and positions Qualcomm against rivals like Nvidia and Mobileye in the rapidly growing automotive computing market . Nakul Duggal, Qualcomm's group general manager for automotive, stated, "As agentic and physical AI drive a new generation of intelligent vehicles, this collaboration enables both companies to define the future of mobility" .

Completion of Modular Acquisition

Qualcomm also completed its acquisition of Modular Inc., a leader in AI-native software infrastructure . The $3.9 billion deal adds an open AI software platform that allows developers to run AI efficiently across CPUs, GPUs, and other accelerators . The acquisition is intended to help Qualcomm compete from personal devices to data centers .

CEO Cristiano Amon stated, "With Modular's world-class engineering team, we're enabling a new and open approach to AI software development, enabling AI to run efficiently across any hardware while maximizing performance" . Modular's co-founder Chris Lattner will join Qualcomm as Executive Vice President of Advanced AI Software and Platforms .

Why the Stock Fell: Weak Guidance and Apple Concerns

Despite these positive developments, the stock declined sharply. Key reasons include:

1. Weak Fourth-Quarter Forecast: Qualcomm forecast adjusted profit for the current quarter of $2.05 to $2.25 per share, below the analyst consensus of $2.36 . Revenue is expected to be between $9.7 billion and $10.5 billion .

2. Accelerating Apple Revenue Decline: Qualcomm expects revenue from Apple products to drop more quickly starting in the fourth quarter due to supply constraints, reducing its share of components used in the next iPhone launch to well below its earlier estimate of 20% .

3. Margin Pressure: CEO Amon noted rising costs across the supply chain, not just for memory chips . Qualcomm plans to raise prices starting September 1 to try to return its margins to historical levels .

4. Investor Sentiment: The market has been unforgiving. Qualcomm's stock had already fallen about 37% from its May peak of $259.92 . Investors appear to be waiting for tangible proof of the company's diversification story, particularly in data center, rather than rewarding long-term strategic announcements .

The Big Picture: Diversification vs. Near-Term Pressure

Qualcomm is navigating a critical transition. While the company reaffirmed its ambitious fiscal 2029 target of $40 billion in non-handset revenue , near-term pressures from the handset market and the Apple transition are weighing on results . The company expects non-handset revenue growth to accelerate from 24% in fiscal 2026 to more than 60% in fiscal 2027 .

For investors, the current valuation—trading at about 17 times forward earnings with a 2.2% dividend yield—may reflect much of the handset uncertainty . The question remains whether the long-term story of diversification into automotive, IoT, and data center can overcome the near-term challenges and unlock value in the quarters ahead .