The world's largest smartphone processor manufacturer, Qualcomm (QCOM.US), issued a weak performance forecast for the current fiscal quarter, intensifying market concerns that memory chip shortages driving up prices will further suppress handset demand. At the time of writing, Qualcomm's stock fell nearly 10% in after-hours trading on Wednesday.

Financial results revealed that for the first fiscal quarter ending December 28, 2025, Qualcomm's revenue increased by 5% year-over-year to $122.5 billion, surpassing the analyst consensus estimate of $121.8 billion. Adjusted net profit was $37.8 billion, down 1% from the prior year, while adjusted earnings per share came in at $3.50, beating the average analyst forecast of $3.40.

Breaking down by specific business segments: revenue for Qualcomm's CDMA Technologies Group in the third fiscal quarter reached $106.13 billion, a 5% increase year-over-year. Within this, revenue from the handset chip business was $78.24 billion, up 3% but falling short of the analyst expectation of $78.6 billion. Automotive chip business revenue hit a record $11.01 billion, surging 15%, marking the second consecutive quarter this segment's revenue has exceeded $10 billion. Revenue from the IoT business was $16.88 billion, growing 9%.

Furthermore, revenue for the Qualcomm Technology Licensing Group in the third fiscal quarter was $15.92 billion, a 4% increase compared to the same period last year.

Looking ahead, Qualcomm anticipates second fiscal quarter revenue, ending in March, to be in the range of $102 billion to $110 billion. This projection falls below the analyst consensus estimate of $112 billion. The company also forecasts adjusted earnings per share between $2.45 and $2.65, which is also lower than the average analyst prediction of $2.89.

Qualcomm indicated that while demand for high-end phones persists, production volumes for some customers will be lower than anticipated due to tight memory chip supply and significant price increases.

Despite CEO Cristiano Amon's efforts to steer the company's transformation by increasing chip sales for automobiles, personal computers, and data centers to diversify the business, the scale of these new ventures remains insufficient to offset the slowdown in the handset chip market.

Nevertheless, Amon stated in a release, "Although our near-term handset business outlook is impacted by industry-wide memory supply constraints, we are encouraged by the demand for premium smartphones."

Additionally, Qualcomm is attempting to enter the lucrative market for artificial intelligence (AI) data center components, having announced a series of products late last year designed to directly challenge Nvidia's (NVDA.US) dominance. Qualcomm stated that initial shipments for this product line are expected next year, with the first customer being Humain, an AI startup backed by the Saudi Arabian government.