QCOM Q3 2025: $10.4B sales, $2.77 EPS; margins near 30%
- Robust Q3 financial performance and revenue growth: Qualcomm delivered $10.4 billion in revenues and $2.77 non-GAAP EPS, with sustained growth in key segments like handsets (evidenced by a 7% YoY growth in handset revenues) and a growing non‑Apple revenue stream of over 15% YoY, indicating strong operational momentum.
- Expanding partnerships and product pipeline: The company has secured a multi‑year agreement with Xiaomi for its flagship Snapdragon eight Elite chip and is launching new products poised to drive flagship upgrades, demonstrating deep penetration in major markets such as China and a leadership position in emerging AI applications.
- Strategic diversification into high-growth areas: Qualcomm is aggressively expanding into data center and personal AI device segments—with initiatives like the acquisition of AlphaWave and development of NPU‑based AI accelerator cards—positioning the company for significant long‑term growth and diversification beyond traditional handset revenues.
- Dependence on declining Apple revenues: Qualcomm is facing a decline in revenue from its Apple segment, which could pressure overall revenue if growth in other segments does not adequately compensate for the loss.
- Risks in early-stage data center expansion: The data center strategy—including the integration of the AlphaWave acquisition—is still in early stages and largely based on advanced discussions, posing execution risks and uncertainty over near-term revenue contributions.
- Increased OEM competition and potential market share erosion: Competitive pressures from OEMs, including challenges like Samsung launching models with its own processors, could reduce Qualcomm’s handset market share and affect profitability despite existing multi-year agreements.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenues ($USD Billions) | Q4 2025 | $9.9 to $10.7 | $10.3 to $11.1 | raised |
Non-GAAP EPS ($USD) | Q4 2025 | $2.60 to $2.80 | $2.75 to $2.95 | raised |
QTL Revenues ($USD Billions) | Q4 2025 | $1.15 to $1.35 | $1.25 to $1.45 | raised |
QTL EBIT Margin (%) | Q4 2025 | 67% to 71% | 69% to 73% | raised |
QCT Revenues ($USD Billions) | Q4 2025 | $8.7 to $9.3 | $9 to $9.6 | raised |
QCT EBIT Margin (%) | Q4 2025 | 28% to 30% | 27% to 29% | lowered |
QCT Handset Revenue Growth (YoY %) | Q4 2025 | 10% | Approximately 5% sequentially | lowered |
QCT IoT Revenue Growth (YoY %) | Q4 2025 | 15% | Flat sequentially | lowered |
Non-GAAP Operating Expenses ($USD Billions) | Q4 2025 | $2.25 | $2.35 | raised |
QCT Automotive Revenue | Q4 2025 | no prior guidance | Expected to reach $1 billion | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Handset revenue growth and premium smartphone market performance | Consistently reported in Q2 2025 with 12% growth and premium-tier market expansion , in Q1 2025 with record revenues and strong premium device demand , and in Q4 2024 noting normalization and expanded flagship launches | In Q3 2025, handset revenues grew 7% YoY with strong premium demand and a 10% growth in the Android business | Recurring positive performance with consistent emphasis on premium market expansion |
Customer dependency risks and declining key segment revenues | In Q2 2025, declining Apple share was highlighted with plans to diversify ; Q1 2025 noted potential revenue decline from Apple ; Q4 2024 discussed transition risks with large customers | Q3 2025 acknowledged lower Apple revenues but stressed that growth in automotive, IoT and other areas more than compensate | Recurring concern, now increasingly offset by diversification efforts |
Diversification into new growth areas | Q2 2025 and Q1 2025 mentioned growth in automotive, IoT, XR, and Windows PCs with targets for non‐handset revenues ; Q4 2024 focused on automotive, IoT, XR, PCs, and personal AI devices | Q3 2025 expanded the discussion to include data centers along with automotive, IoT, XR, Windows PCs, and personal AI devices | Recurring with an expanded emphasis, notably with new focus on data centers and personal AI |
Strategic investments in AI and advanced technologies | Q2 2025 highlighted on-device AI, acquisitions (Edge Impulse and Focus AI) and advances in NPU content ; Q1 2025 focused on on-device AI experiences and AI-enhanced smartphones and PCs | Q3 2025 detailed investments in NPU-based AI accelerator cards, the AlphaWave acquisition, and broader generative AI integration | Recurring with increased focus on generative AI and data center–related AI enhancements |
Increasing OEM competition and potential market share erosion | Q2 2025 described a stable competitive landscape with Samsung and MediaTek in China ; Q1 2025 had no mention; Q4 2024 did not explicitly address this risk | Q3 2025 explicitly discussed Samsung’s in-house processor launches and emphasized a baseline share with Samsung while noting increased competition | Emerging with heightened emphasis in Q3 relative to earlier periods |
Margin pressure and cost challenges | Q1 2025 explicitly mentioned higher wafer costs from TSMC impacting margins , Q2 2025 noted a slight 90 basis point decline due to product mix , and Q4 2024 explained margin dynamics via product mix without direct cost commentary | Q3 2025 did not specifically mention margin pressures, though overall margin profile remained a focus | Recurring concerns appear managed; Q3 shows less direct emphasis, suggesting effective mitigation |
Execution and integration risks in new market diversification strategies | Q2 2025 and Q4 2024 touched on operational discipline and transformation without specific risk details; Q1 2025 had no explicit discussion | Q3 2025 mentioned cautious approaches in driving data center initiatives and disciplined operating expense management | Not explicitly addressed; remains a peripheral topic with ongoing careful execution |
Strategic partnerships and acquisitions | Q2 2025 discussed IoT acquisitions (Edge Impulse and Focus AI) with less focus on multi-year OEM deals; Q1 2025 had minimal mention; Q4 2024 did not mention such partnerships | Q3 2025 featured detailed multi-year agreements with Xiaomi and the planned acquisition of AlphaWave for data center and AI complementarities | Recurring with increased focus in Q3, highlighting enhanced strategic deals |
Global market dynamics and trade risks | Q1 2025 noted early effects of China subsidies and dismissed tariff pull-forward effects ; Q2 2025 provided in-depth commentary on tariffs, indirect impacts, and subsidy volatility ; Q4 2024 emphasized normalization and strong China performance | Q3 2025 reiterated robust customer relationships amid global trade volatility and stressed a strong position in the Chinese market despite external risks | Recurring with stable optimism, balancing detailed discussions in earlier periods with a concise positive outlook in Q3 |
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Margin Impact
Q: Impact of Apple decline on margins?
A: Management noted margins remain strong near 30%, with growth in auto and IoT offsetting the Apple decline. -
Acquisition Strategy
Q: Will you pursue further acquisitions?
A: They are focused on driving the $2.4B AlphaWave closure to bolster data center capabilities, with no additional acquisitions planned at this time. -
Data Center Outlook
Q: What are data center engagement details?
A: They are in advanced discussions about ARM-based AI products, expecting potential revenue contributions around fiscal 2028, though details remain limited. -
China Demand
Q: Is there pull-in in the China market?
A: Management sees no pull-in issues; instead, robust partnerships like the multiyear Xiaomi agreement underscore a strong, steady China handset business. -
Seasonal Trends
Q: What are December seasonal expectations?
A: They expect a typical seasonal pattern with December remaining the strongest quarter, adjusted for a lower Apple share. -
Samsung Relationship
Q: How is Samsung share and ASP evolving?
A: The baseline Samsung share is set at 75%, with premium-tier flagships showing healthy ASP increases that support overall revenue strength. -
Android AI Trends
Q: How are Gemini and Galaxy AI impacting Android?
A: Management highlighted that rising Gemini usage and a 3x increase in Galaxy AI engagement are revitalizing the Android ecosystem.
Research analysts covering QUALCOMM INC/DE.