Qualcomm (QCOM) Up 35.5% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Qualcomm (QCOM). Shares have added about 35.5% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Qualcomm due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.Qualcomm Surpasses Q2 Earnings Estimates on Solid Auto, IoT DemandQualcomm reported strong second-quarter fiscal 2026 non-GAAP earnings of $2.65 per share, which declined 7% year over year but topped the Zacks Consensus Estimate of $2.57 by 3.11%. Non-GAAP revenues were $10.60 billion, falling 2% year over year and missing the consensus mark of $10.64 billion 0.2%. Diversification remained the key positive, with record automotive sales and continued IoT momentum helping offset handset-related pressure tied to a challenging memory environment and cautious build behavior among certain OEMs. QCOM Posts Mixed Top-Line Performance by End MarketHandsets were the main source of pressure. Qualcomm CDMA Technologies (QCT) handset revenues were $6.02 billion, declining 13% from the year-ago quarter as OEMs, particularly in China, remained cautious on builds amid memory supply and pricing dynamics and continued to draw down channel inventory. Automotive and IoT provided meaningful support. QCT automotive revenues rose 38% year over year to a record $1.33 billion, while QCT IoT revenues increased 9% to $1.73 billion, reflecting growth across consumer and industrial products. Qualcomm Shows Diversification in Segment ResultsQCT segment revenues were $9.08 billion, down 4% year over year, and QCT EBT margin contracted to 27% from 30% a year earlier, reflecting weaker handset revenues and mix. Within QCT, automotive strength and IoT growth helped partially cushion the handset decline. Qualcomm Technology Licensing (QTL) revenues totaled $1.38 billion, up 5% year over year, with QTL EBT margin expanding to 72% from 70%, indicating solid profitability in the licensing business during the quarter. QCOM Leans Into Auto Content and ADAS ExpansionManagement continues to frame automotive as a multi-year content expansion opportunity. Qualcomm highlighted that it exceeded $5 billion in annualized automotive revenues for the first time and expects to exit fiscal 2026 at a run rate above $6 billion, driven by the Snapdragon Digital Chassis roadmap spanning connectivity, telematics, infotainment and advanced driver assistance. The company also pointed to increasing traction in automated driving deployments. It noted that more than 1 million cars are operating ADAS and autonomy on Snapdragon Ride processors, while indicating that commercial shipments of its next-generation digital chassis platform are expected to begin by the end of the fiscal year. Qualcomm Highlights IoT and Edge AI Product CyclesIoT commentary emphasized product renewal cycles tied to edge AI workloads. Management described healthy pipeline activity and increasing customer engagement across consumer and industrial categories as more workloads shift to on-device processing and context-aware experiences. The company also underscored multiple initiatives designed to expand its footprint in industrial AI and developer ecosystems. These included partnerships and platform announcements aimed at accelerating adoption in areas such as factory automation, robotics and other edge deployments where low-power compute and connectivity are critical. QCOM Returns Capital and Updates Shareholder ProgramsQualcomm remained active on shareholder returns. During the quarter, it returned $3.7 billion to stockholders, including $2.8 billion in share repurchases and $945 million in dividends, reflecting an acceleration in capital return activity. The company also disclosed governance actions supporting ongoing payouts, including a higher quarterly dividend rate and a new $20 billion stock repurchase authorization, reinforcing management’s commitment to returning cash while continuing to invest in diversification priorities. Qualcomm Guides Q3 Lower as Handset Caution LingersFor the third quarter of fiscal 2026, Qualcomm guided revenues to $9.2-$10.0 billion and non-GAAP earnings to $2.10-$2.30, reflecting expected softness tied to the same memory-driven OEM behavior that shaped the March quarter. Management reiterated that QCT handset revenues from China-based customers are expected to bottom in the third quarter and return to sequential growth in the following quarter as the inventory drawdown cycle eases. However, near-term visibility remains influenced by memory supply constraints and related pricing.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in estimates revision.The consensus estimate has shifted -12.23% due to these changes.VGM ScoresCurrently, Qualcomm has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for value investors.Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Qualcomm has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.Performance of an Industry PlayerQualcomm is part of the Zacks Electronics - Semiconductors industry. Over the past month, Lam Research (LRCX), a stock from the same industry, has gained 23.3%. The company reported its results for the quarter ended March 2026 more than a month ago.Lam Research reported revenues of $5.84 billion in the last reported quarter, representing a year-over-year change of +23.8%. EPS of $1.47 for the same period compares with $1.04 a year ago.For the current quarter, Lam Research is expected to post earnings of $1.65 per share, indicating a change of +24.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.3% over the last 30 days.Lam Research has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. 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