Qualcomm Crashes on a Beat: Memory Shortages Torch Guidance and Blow a Hole Through the Chart

Qualcomm didn’t miss the quarter — it missed the market’s patience, as a supply-chain choke point in memory flipped a solid earnings beat into a brutal post-earnings reset. The company beat on fiscal Q1 results , put up record total revenue, and reiterated long-term targets, but the Q2 guide came in well below consensus and management was unusually blunt about the culprit: memory supply constraints that are now “defining the size of the mobile market.” When a stock is priced like a steady compounder and then tells you the near-term ceiling is set by someone else’s supply chain, you get the kind of gap lower that ignores your feelings, your valuation model, and your 200-week moving average.

Start with the headline numbers . Qualcomm reported Q1 adjusted EPS of $3.50 versus the Street at $3.41, with revenue of $12.25B versus ~$12.21B. On the surface, that’s fine: a small beat, continued execution, and total revenue up about 5% year over year. The problem is the forward look. For Q2, Qualcomm guided revenue to $10.2B–$11.0B versus consensus around $11.1B, and adjusted EPS of $2.45–$2.65 versus consensus near $2.89. That is not a “cautious” guide; it’s a very real step-down, and it immediately forces investors to reprice both earnings power and confidence in the cadence of handset builds over the next couple quarters.

The core driver of the guide-down is supply-side, not demand-side, and management tried hard to make that distinction. Qualcomm’s CEO Cristiano Amon emphasized that consumer demand for premium and high-tier handsets has been healthy and that the industry is in an upgrade cycle. But Qualcomm’s handset customers buy their own memory and pair it with Qualcomm’s processors and modems. If DRAM availability tightens and pricing spikes, OEMs can’t build phones at the planned volumes, and they become more conservative on purchase commitments and inventory. Qualcomm’s CFO Akash Palkhiwala framed the guidance gap as directly tied to memory constraints and related pricing impacts. In other words: end demand may be there, but the assembly line can’t fully express it.

That nuance matters, but it didn’t save the stock because timing uncertainty is poison, especially when the largest profit pool is still handsets. In Q1, handset revenue was $7.82B, up about 3% year over year. That stability is reassuring, but it also explains the violent reaction: smartphones remain the dominant earnings engine, so anything that caps handset volumes hits the model immediately. Management suggested OEMs may respond by leaning into higher-tier devices, where Qualcomm believes it is most competitive and where higher memory costs can be absorbed more easily. That may support mix, but it also implies lower unit elasticity, and it doesn’t answer the key question investors are asking this morning: how long does the memory bottleneck persist?

Breaking down the company’s two reporting segments helps clarify the push-pull. Qualcomm’s chip business, QCT, is the volume driver and the one most exposed to device production swings. In Q1, QCT revenue was described as a record $10.6B, driven by strength in flagship handsets, plus continued momentum in automotive and IoT. Within QCT, IoT revenue was $1.7B, up ~9% year over year, and automotive revenue was $1.1B, up ~15%. These are the diversification engines investors want to see scaling — longer-cycle, structurally growing markets with less consumer-whiplash than phones. The issue is scale. Even with solid growth, IoT + Auto are still a minority of the QCT pie, so handset turbulence dominates the near-term outcome.

The second segment, QTL (licensing), is Qualcomm’s margin anchor. QTL revenue was about $1.6B in Q1 and came with an EBT margin of 77%, which is exactly why investors treat it as a stabilizer in tougher tape. In the Q2 guide, Qualcomm expects QTL revenue of $1.2B–$1.4B with EBT margins of 68%–72%, framed as a “normal sequential trend.” That implies licensing remains healthy, but it also reminds investors that QTL can’t fully immunize earnings when QCT volumes reset lower and fixed costs don’t flex fast enough.

Margins are where the market is most unforgiving right now, and Qualcomm’s outlook is the other reason the stock is getting hit so hard. Management guided QCT EBT margins to 26%–28% for Q2, down meaningfully from the Q1 context (management cited QCT EBT margin at 31% in the quarter). Even if gross margins are “largely in line” quarter to quarter, the math still hurts: lower revenue scale plus largely fixed operating expenses compresses operating leverage. Qualcomm also guided non-GAAP OpEx around $2.6B next quarter, which reads as a steady investment posture — good strategically, but unhelpful when the top line is being constrained by outside supply. This is why the stock can drop on a beat: the earnings quality shifts from “operating leverage” to “cost absorption,” and the market instantly rerates the near-term margin trajectory.

Layer on the analyst narrative, and the selling pressure makes more sense. Bank of America downgraded QCOM to Neutral from Buy and cut its price objective, pointing to handset weakness, rising memory prices, and share losses tempering growth. RBC also cut its target and stayed on a sector-perform-style view, again focusing on memory tightness driving weaker outlook, plus ongoing share shifts at Apple and Samsung. Even if management pushes back by emphasizing competitiveness in premium tiers and calling this “100% related to memory,” investors have heard enough “temporary” supply stories over the years to demand proof — and the chart breakdown (200-week level around $146 giving way) is adding forced selling to fundamental de-risking.

So what should investors watch from here, beyond the obvious “does it bounce”? First, any signs that DRAM availability improves or that smartphone OEM build plans recover; management effectively tied the entire near-term handset ceiling to that variable. Second, QCT margins: Qualcomm is guiding 26%–28% EBT margin next quarter, so the debate will be whether this is a one-quarter trough from scale or the start of a more stubborn compression. Third, handset share dynamics: management flagged ~75% share in Samsung’s upcoming premium family as expected, but analysts are clearly focused on Apple/Samsung share shifts and how those intersect with unit constraints. Fourth, diversification follow-through: Qualcomm guided IoT to low-teens growth and automotive growth accelerating to greater than 35% in Q2 — if those numbers land, they help stabilize sentiment even if handsets stay capped. Fifth, the longer-dated swing factor: management plans to provide more detail on its data center/AI roadmap at an upcoming investor event, but meaningful revenue contribution isn’t expected until fiscal 2027, which means it’s a narrative bridge, not a near-term earnings fix.

Bottom line: Qualcomm didn’t trip over execution; it tripped over a supply chain bottleneck that it can’t directly solve, at a moment when the market is obsessed with margins and forward visibility. The stock is selling off because Q2 resets both revenue expectations and operating leverage, and because investors don’t yet know when “normal” returns. Until the memory constraint story shows real evidence of easing, the market will treat every rebound as guilty until proven innocent — and the chart is now auditioning for a role as “overhead resistance.”