Qualcomm Sees Bright Future in Data Centers Amid Slumping Smartphones

Qualcomm is banking on the data center market to buoy its fortunes as smartphone sales continue to wane. The company projects $650 million in data center revenue for the first quarter of 2027, a figure that aligns with its broader strategy to capture a larger slice of the burgeoning AI-driven computing landscape. ¹³

In a recent earnings report, Qualcomm revealed that its total revenue for 2026 stood at $10.4 billion, marking a period of steady performance despite headwinds in traditional markets. However, the company's stock price experienced a dip, reflecting investor concerns over the earnings forecast, which came in slightly below expectations. ²³

According to several outlets, Qualcomm envisions a substantial expansion in its data center business, with projections indicating that revenue could reach $5 billion by the end of 2027 and climb to $15 billion by 2029. This ambitious target underscores the company’s determination to diversify its revenue streams and tap into the growing demand for advanced computing solutions. ¹

Despite these promising forecasts, Qualcomm's earnings report for the most recent quarter showed a notable decrease in smartphone-related revenues. Specifically, handset chip sales dropped by 26% to $5.14 billion, while overall revenue was adjusted to $10.44 billion. These figures highlight the ongoing challenges faced by the mobile device industry, where high memory costs have dampened consumer demand. ³

Moreover, Qualcomm's partnership with tech giants like Amazon and Meta signals its intent to leverage its expertise in semiconductor technology to compete in the increasingly competitive AI data center market. The company also noted a robust performance in other sectors, such as automotive, where revenue surged by 89% to $1.99 billion. ¹³

Looking ahead, Qualcomm anticipates the handset market to remain relatively stable in 2027, with no significant growth or decline expected. This forecast contrasts with the sharp decline seen in 2026, where smartphone sales dipped by approximately 20 percent compared to the previous year. ¹³

In addition to its focus on data centers, Qualcomm reported solid gains in other areas of its business. Internet of Things (IoT) revenue grew by 4% to $1.88 billion, while licensing income, known as QTL revenue, saw a modest decrease of 7% to $1.3 billion. These segments contribute to Qualcomm's diversified portfolio and provide a buffer against volatility in any single market. ³

As Qualcomm navigates the shifting landscape of the tech industry, its strategic pivot towards data centers represents a critical move to maintain its position as a leader in semiconductor technology. With Apple reportedly reducing its reliance on Qualcomm, the company must capitalize on emerging opportunities to sustain its financial health and innovation pipeline. ²

What we know

• Qualcomm forecasts $650 million in data center revenue for Q1 2027. ¹³
• Total revenue for 2026 was $10.4 billion. ¹³
• Qualcomm's stock price decreased. ²³
• Projected data center revenue to reach $5 billion by end of 2027 and $15 billion by 2029. ¹
• Reported quarterly results exceeding Wall Street estimates. ³
• Earnings forecast lower than expected, leading to a 6% drop in stock price. ³
• Revenue was $10.44 billion, adjusted. ³
• Smartphone sales decreased by approximately 20 percent in 2026 compared to 2025. ¹
• Qualcomm aims to expand into the AI data center market. ¹
• Data center chips expected to account for about 30 percent of Qualcomm's business in the future. ¹
• Apple reducing its business with Qualcomm. ²
• High memory costs affecting smartphone demand negatively. ²
• Adjusted earnings per share were $2.17, compared to the expected $2.16. ³
• Handset chip sales decreased by 26% to $5.14 billion. ³
• Predicts the handset market will be flat in 2027. ³
• Automotive revenue increased by 89% to $1.99 billion. ³
• Partnered with companies such as Amazon and Meta. ¹
• Internet of Things revenue grew by 4% to $1.88 billion. ³
• QTL revenue, which includes licensing income, decreased by 7% to $1.3 billion. ³