QUALCOMM INC/DE Q2 FY26 earnings call QCOM

Qualcomm sees agentic AI fundamentally changing user experiences across connected edge devices, expanding its addressable market, and driving a step-function increase in strategic customer engagement. This shift is reshaping roadmaps across all platforms, from smart wearables to data centers, and accelerating diversification efforts. The company highlights its CPU performance and unparalleled connectivity solutions as key assets for delivering agentic AI experiences.

The automotive segment achieved record revenues of $1.3 billion in Q2 FY26, growing 38% year-over-year, and surpassed a $5 billion annualized run rate. This growth is fueled by the Snapdragon Digital Chassis platform, with the fifth-generation platform, featuring 3x higher CPU throughput, 3x GPU capability, and 12x higher NPU performance, set to begin commercial shipments by fiscal year-end. Over 1 million cars now operate ADAS/autonomy on Snapdragon Ride processors, with broad customer engagement for scaling ADAS.

Snapdragon X2 PC platforms are currently in production, featuring an NPU with up to 85 TOPS and an Orion CPU that outperforms Intel's [indiscernible] Lake by nearly 30%, enabling powerful always-on agentic experiences. In industrial AI, the Dragonwing IQ10 platform, with 700 [indiscernible] on-device AI performance and an 18-core Orion CPU, is driving new design wins and deployments across various verticals, including robotics with a multiyear agreement with Nora. A new Arduino platform, [indiscernible], was also introduced for robotics and industrial AI developers.

Qualcomm is making significant progress in the data center, with the Alphawave integration off to a strong start and multiple opportunities being pursued with large hyperscalers, cloud service providers, and sovereign AI projects. The company is entering the custom silicon space, with initial shipments to a leading hyperscaler expected in the December quarter, signaling a multi-generation engagement. Development of its leading data center CPU and high-performance AI inference accelerators is also progressing well.

QCT handset revenues of $6 billion were impacted by cautious OEM build plans and channel inventory drawdown due to memory industry dynamics. However, Qualcomm anticipates China QCT Android shipments to bottom in fiscal Q3 and return to sequential growth in the following quarter. The company expects agentic smartphones to soon influence the premium tier and drive an important AI upgrade cycle, providing a tailwind for premium demand into fiscal 2027.

Qualcomm is positioning itself as a key architect and beneficiary of the 6G transition, which is envisioned as an AI-native network integrating communication and real-time sensing. This next generation of wireless is expected to enable new classes of mobile and personal devices, such as smart glasses with enhanced uplink capabilities. The company plans prototype demonstrations and first silicon in 2028, with early launches in 2029 and scale by 2030, forming a 60-company coalition to shape the roadmap.

The company returned $3.7 billion to stockholders in Q2 FY26, comprising $2.8 billion in share repurchases and $945 million in dividends, reflecting an accelerated capital return program. Additionally, Qualcomm recorded a $5.7 million non-cash GAAP tax benefit in the second fiscal quarter due to the reversal of a previously recorded tax valuation allowance, reflecting new guidance on corporate alternative minimum tax allowing deduction of previously capitalized domestic R&D expenses.