Qualcomm (QCOM) Q2 FY26 earnings call: guidance and Q&A

Seeking more details on the custom silicon engagement with a hyperscaler, specifically its scope (CPU, accelerator, networking chip) and magnitude, beyond what was shared in prepared remarks.

Management stated they cannot provide extensive details before the Investor Day on June 24 but confirmed it is a custom product for a large hyperscaler, with expectations for a multi-generation engagement. They highlighted Qualcomm's CPU assets, custom ASIC capabilities from Alphawave, and connectivity IP as key differentiators.

“The only thing I can tell, it is a large hyperscaler and we're really thinking about a multi-generation engagement.”

asked by Joshua Buchalter · answered by Cristiano Amon

Questioned the confidence in China Android QCT sales bottoming in fiscal Q3, given typical seasonality and low visibility in the handset market.

Management explained that the impact on Chinese OEMs is due to both a slight decline in mid-low tier handset market and, more significantly, OEMs reducing build plans and drawing down channel inventory. They are significantly under-shipping end consumer demand, and the Q3 bottom reflects the expected end of this channel inventory drawdown, with shipments then reconciling to the handset business size.

“So as we look forward, we feel confident that the third quarter is now the bottom. And so as we go forward, the revenue is going to be much closer to the scale of the handset business versus the inventory drawdown factor continuing into our forecast.”

asked by Joshua Buchalter · answered by Akash Palkhiwala

Asked about Qualcomm's perspective on the competitive landscape in the data center, considering vertical integration by IP providers and NVIDIA's focus on inferencing, and how Qualcomm's strategy has evolved.

Management described the evolving AI landscape from training to dedicated inference solutions and agentic experiences. They highlighted Qualcomm's differentiated CPU assets, custom silicon capabilities (enhanced by Alphawave), high-compute density/low-TCO accelerators for specific functions, and strong position at the edge as competitive advantages. More details will be provided at Investor Day.

“And we have built and we'll provide details on Investor Day a dedicated CPU for agentic experiences in the data center. We're going to show the metrics, we're going to show how it performs. People will be able to compare.”

asked by Samik Chatterjee · answered by Cristiano Amon

Inquired about the long-term engagement with Samsung, specifically the multi-year agreement framework, given market share changes and increased use of in-house SoCs.

Management reiterated that the framework for the relationship with Samsung is a greater than 70% share for Qualcomm's Snapdragon, which is a stable and visible relationship. This framework applies to the current year and next year, and they see an opportunity for a positive bias on that share due to agentic AI.

“That has changed to greater than 70%, as you know, and that has been the framework. And sometimes we get more than that, but we plan our business in greater than 70% share, which is exactly what we have said. You should expect that that is the framework of this year, and that is also the framework for next year.”

asked by Samik Chatterjee · answered by Cristiano Amon

Asked how to think about handset seasonality in the September quarter, considering the expected bottoming of China handsets in Q3 and the anticipated Apple step-down.

Management confirmed that China QCT handset revenues are expected to grow sequentially from the June quarter bottom. For Apple, they noted that the September quarter is typically a growth quarter for Apple product revenue, but this will not be seen this year due to the share assumption change. They did not provide specific guidance for overall handset growth in Q4 but indicated these two factors are key inputs.

“I mean do you think handsets growing sequentially in September or not given those two factors? Stacy, we are not specifically guiding it at that point -- at this point, but I think those 2 factors would be the input into the forecast.”

asked by Stacy Rasgon · answered by Akash Palkhiwala

Questioned if memory issues would continue to be a headwind for agentic smartphones into 2027, and how much memory such devices would need.

Management stated it's too early to predict 2027 memory dynamics but noted that agentic devices are changing design requirements, leading to more capable CPUs. They observed interesting associations forming between smartphone and AI companies and new memory players building capacity. The situation will need to be monitored.

“There's a lot of noise in the memory environment right now. I wish I could make a prediction on '27 is a little early, but we see a combination of some of the same companies that want a lot of demand for data centers and also getting involved with some of the devices at the edge as well.”

asked by Stacy Rasgon · answered by Cristiano Amon

Expressed surprise at the fast timeline for custom silicon shipments by year-end, given typical cycle times, and asked if it primarily leverages Alphawave's existing IP or a significant portion of Qualcomm's IP.

Management clarified that engagements with data center customers predate the Alphawave acquisition, which primarily increased execution capabilities and IP portfolio. They emphasized that the multi-generation agreement will bring a lot of Qualcomm's capabilities to the table, but declined to provide more specifics before Investor Day.

“I think the acquisition of Alphawave increase our execution capabilities in the portfolio of IP. I think you should expect that we're going to have a longer multi-generation agreement with those companies that brings a lot of Qualcomm capabilities to the table.”

asked by Timothy Arcuri · answered by Cristiano Amon

Asked if Qualcomm's intention is to approach the data center market primarily from an ASIC perspective, rather than a merchant one, and the potential impact on margins and competitive positioning.

Management stated their strategy is "all of the above," indicating flexibility as a new entrant. They acknowledge that the data center market is disaggregating, with different approaches to compute and connectivity. Qualcomm will play on both merchant and custom fronts, configuring its IP blocks for bespoke solutions. They expect the custom engagement to be accretive at the operating margin level.

“You should assume that Qualcomm will play on merchant, on custom and it's going to be a combination of how we're going to configure our IP and different IP blocks for different solutions is going to be a bespoke business.”

asked by Vivek Arya · answered by Cristiano Amon