Qualcomm reported third-quarter earnings on Wednesday that matched Wall Street's earnings forecast and topped revenue expectations, even as the smartphone business it still depends on showed more strain. The company posted EPS of $2.21 on revenue of $9.9 billion, ahead of the $9.6 billion analysts had expected.
The numbers mattered because investors are searching for proof that QCOM can grow beyond phones at a time when the market for them is slowing. Qualcomm's handset sales came in at more than $5.1 billion, above the $4.9 billion forecast, and automotive-related sales reached $1.5 billion, also ahead of expectations. But the larger story is not that handset demand held up for one quarter. It is that Qualcomm is trying to make everything else bigger before the phone cycle weakens further.
That shift was visible in the company's CDMA Technologies segment, which brought in $8.5 billion in revenue versus the $8.2 billion analysts expected. Cristiano Amon said the quarter reflected solid execution despite a challenging memory and supply environment, and he pointed to the company's growth strategy as the driver behind the results. Qualcomm has been building up its non-handset business for months, including Data Center offerings it showed in June, and it now expects those sales lines to become a much larger part of the company over the next few years.
Akash Palkhiwala said Qualcomm expects its data center products to generate $5 billion in revenue in fiscal 2027, while the company also said year-over-year growth in non-handset revenues, including Data Center, should accelerate from 24% in fiscal 2026 to greater than 60% in fiscal 2027. It has doubled its non-handset sales target for fiscal 2029 to $40 billion. Those are big numbers, but they still sit beside a phone market that is under pressure, not a market that is suddenly expanding to meet them.
Stacy Rasgon put that pressure bluntly: the smartphone industry is not great. He said memory prices are rising, AI is pulling supply toward other uses and unit growth has gone negative, all of which leaves less room for smartphone players. CounterPoint Research said Q2 global smartphone shipments fell 11% year over year, the worst second quarter in 13 years. That helps explain why Qualcomm can beat expectations now and still need a new growth engine so badly.
The quarter gives Qualcomm room to keep telling that story, but the next test is execution. The company has set out a path in which non-handset revenue, especially Data Center, does more of the work that phones have done for years. If those targets are met, QCOM will look less like a handset supplier with side businesses and more like a company that finally found a second act.
