Wireless chipmaker Qualcomm (NASDAQ: QCOM) met Wall Street’s revenue expectations in Q1 CY2026, but sales fell by 2.2% year on year to $10.6 billion. On the other hand, next quarter’s revenue guidance of $9.6 billion was less impressive, coming in 6.4% below analysts’ estimates. Its non-GAAP profit of $2.65 per share was 3.6% above analysts’ consensus estimates.
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Qualcomm (QCOM) Q1 CY2026 Highlights:
- Revenue: $10.6 billion vs analyst estimates of $10.58 billion (2.2% year-on-year decline, in line)
- Adjusted EPS: $2.65 vs analyst estimates of $2.56 (3.6% beat)
- Adjusted Operating Income: $3.28 billion vs analyst estimates of $3.23 billion (30.9% margin, 1.5% beat)
- Revenue Guidance for Q2 CY2026 is $9.6 billion at the midpoint, below analyst estimates of $10.26 billion
- Adjusted EPS guidance for Q2 CY2026 is $2.20 at the midpoint, below analyst estimates of $2.43
- Operating Margin: 21.8%, down from 28.8% in the same quarter last year
- Free Cash Flow Margin: 18.1%, down from 21.6% in the same quarter last year
- Inventory Days Outstanding: 137, up from 123 in the previous quarter
- Market Capitalization: $160.1 billion
Company Overview
Having been at the forefront of developing the standards for cellular connectivity for over four decades, Qualcomm (NASDAQ: QCOM) is a leading innovator and a fabless manufacturer of wireless technology chips used in smartphones, autos and internet of things appliances.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Qualcomm grew its sales at a solid 10.1% compounded annual growth rate. Its growth beat the average semiconductor company and shows its offerings resonate with customers. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.
Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore's Law) could make yesterday's hit product obsolete today. Qualcomm’s annualized revenue growth of 10.5% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong. 
This quarter, Qualcomm reported a rather uninspiring 2.2% year-on-year revenue decline to $10.6 billion of revenue, in line with Wall Street’s estimates. Company management is currently guiding for a 7.4% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to decline by 4.1% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will see some demand headwinds.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Qualcomm’s DIO came in at 137, which is 9 days above its five-year average, suggesting that the company’s inventory has grown to higher levels than we’ve seen in the past.
Key Takeaways from Qualcomm’s Q1 Results
It was good to see Qualcomm beat analysts’ EPS expectations this quarter. We were also happy its adjusted operating income narrowly outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next quarter missed and its inventory levels increased. Overall, this quarter was mixed. The stock remained flat at $151.89 immediately after reporting.
So should you invest in Qualcomm right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
