Fresh off a report that it is working on a smartphone chip with OpenAI, Qualcomm (QCOM) will report its second-quarter earnings on Wednesday.
According to TF International Securities analyst Ming-Chi Kuo, Qualcomm’s OpenAI chip will enter mass production in 2028, as the AI Lab seeks to do something that Amazon (AMZN), Meta (META) and Microsoft (MSFT) have failed to do: break the smartphone duopoly of Apple (AAPL) and Google (GOOG).
But Kuo’s report comes at a difficult time for the smartphone market, as the global memory crisis reduces supply, increases prices and erodes demand for entry-level devices.
According to International Data Corporation, global smartphone shipments decreased 4.1% in the first quarter to 289.7 million units. That snapped a 10-quarter growth streak that began in mid-2023.
Worse yet, the market research firm says the first-quarter decline is a “slight precursor” to what the rest of 2026 has in store for the market.
According to Bernstein Research’s Stacy Rasgon, the broader smartphone space could face double-digit unit declines this year.
Qualcomm’s mobile phone business makes up the vast majority of its total revenue, although it is working to diversify into other areas, including sales of data center chips, and increasingly push its automotive and robotics technologies.
But Rasgon says those efforts are unlikely to offset the drop in smartphone shipments.
For the second quarter, Qualcomm is expected to post earnings per share (EPS) of $2.55 and revenue of $10.56 billion, according to Bloomberg analyst consensus estimates. This is down from the same quarter last year, when the company posted earnings per share of $2.85 and revenue of $10.83 billion.
Wall Street anticipates the biggest drop from Qualcomm’s mobile phone segment, which is expected to fall 12.5% year over year to $6.05 billion.
Overall, the company’s QCT business, which includes mobile, automotive and Internet of Things revenue, will decline 3.5% to $9.13 billion.
Sales from Qualcomm’s licensing segment will peak at $1.32 billion.
However, the company could provide Wall Street with some good news in June, when CEO Cristiano Amon delivers the keynote address at the annual Computex conference in Taiwan.
Titled “AI Together,” the speech could offer a better look at Qualcomm’s data center strategy and how it plans to gain share in this space.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on X/Twitter at @DanielHowley.
Click here for the latest technology news that will affect the stock market
Read the latest financial and business news from Yahoo Finance
