Qualcomm Posts $10.4B Quarterly Revenue as Auto and IoT Surge

Qualcomm’s automotive and IoT divisions fuel growth as semiconductor giant expands beyond traditional smartphone business

Key Takeaways

• Revenue climbs 10% to $10.37 billion in fiscal Q3 2025, driven by automotive and IoT segments growing 21% and 24% respectively, while smartphone revenue growth remains modest at 7%.
• Smartphone market share lags at 28% globally behind MediaTek’s 36%, as overall smartphone shipment growth slows to just 0.2-2% year-over-year in Q1 2025.
• $2.4 billion Alphawave Semi acquisition announced to enhance high-speed connectivity capabilities, while Q4 revenue guidance of $10.3-11.1 billion only modestly exceeds analyst expectations.

Introduction

Qualcomm delivers mixed signals to investors as the chip giant posts strong overall revenue growth while grappling with smartphone market saturation. The company’s fiscal third quarter results reveal a strategic pivot taking hold, with automotive and IoT segments driving momentum as traditional handset demand plateaus.

The San Diego-based semiconductor leader reported 10% year-over-year revenue growth to $10.37 billion, beating analyst expectations. However, smartphone-related sales of $6.33 billion fell short of the $6.48 billion consensus estimate, highlighting the challenges facing Qualcomm’s core business segment.

Key Developments

Qualcomm’s diversification strategy shows tangible results this quarter. Automotive revenue surged 21% to a record $984 million, while IoT revenue jumped 24% to $1.68 billion. Combined, these high-growth segments contributed $2.7 billion in revenue, representing 23% year-over-year growth.

The company’s QCT segment, which includes chipsets and licensing, posted revenues of $9.0 billion with an earnings before tax margin of 30%. Non-GAAP earnings per share reached $2.77, surpassing analyst estimates of $2.72 and marking a 19% increase from the previous year.

Qualcomm announced plans to acquire Alphawave Semi for approximately $2.4 billion in enterprise value. The acquisition targets enhanced high-speed wired connectivity and compute technologies, supporting the company’s expansion beyond traditional smartphone markets.

Market Impact

Qualcomm shares traded at $163 in after-hours sessions, gaining 0.57% following a 1.86% decline during regular trading. The mixed market reaction reflects investor uncertainty about growth prospects in the company’s largest revenue segment.

Global smartphone market dynamics present ongoing challenges. Industry data shows smartphone shipment growth of just 0.2% to 2% year-over-year in Q1 2025, indicating market maturity in developed regions. Qualcomm holds 28% of the global smartphone application processor market, trailing MediaTek’s 36% share but maintaining its position ahead of Apple at 17%.

The semiconductor sector continues to navigate supply chain complexities and geopolitical tensions. Tariff concerns persist as a potential headwind for chip manufacturers with global operations and customer bases.

Strategic Insights

Qualcomm’s results underscore the critical importance of diversification in the semiconductor industry. The company’s automotive and IoT segments now provide essential growth engines as smartphone market expansion slows globally.

The automotive semiconductor opportunity represents a structural shift in the industry. Vehicle electrification and autonomous driving technologies require increasingly sophisticated chips, creating new revenue streams for traditional mobile chip makers. Qualcomm’s 21% automotive revenue growth demonstrates successful penetration of this expanding market.

AI integration across Qualcomm’s Snapdragon platforms positions the company for next-generation computing demands. The company showcased running a 1 billion parameter AI model locally on smart glasses, highlighting capabilities in edge AI processing that extend beyond smartphones into emerging device categories.

Expert Opinions and Data

“Another quarter of strong growth in QCT Automotive and IoT revenues further validates our diversification strategy and confidence in achieving our long-term revenue targets,” stated Qualcomm President and CEO Cristiano Amon during the earnings announcement.

Industry analysts view Qualcomm’s expansion into automotive and IoT as strategically necessary given smartphone market maturation. The company’s ability to maintain technology leadership while building presence in higher-growth segments remains crucial for long-term performance.

Qualcomm returned $3.8 billion to shareholders through dividends and share repurchases during the quarter. The company distributed $967 million in cash dividends at $0.89 per share and repurchased $2.8 billion worth of stock, representing 19 million shares. Management projects total capital returns will equal approximately 90% of net operating cash flow for fiscal 2025.

The company provided Q4 2025 guidance projecting revenue between $10.3 billion and $11.1 billion, with the midpoint of $10.7 billion only slightly above analyst consensus of $10.6 billion as compiled by Bloomberg. Non-GAAP earnings per share guidance ranges from $2.75 to $2.95.

Conclusion

Qualcomm’s latest results demonstrate both the opportunities and constraints facing major semiconductor companies. Strong performance in automotive and IoT segments validates the company’s strategic diversification, while smartphone market headwinds underscore the need for continued expansion into new categories.

The company’s financial strength remains evident through consistent shareholder returns and solid profitability metrics. Qualcomm’s position in emerging technologies like edge AI processing and automotive semiconductors provides multiple avenues for growth beyond traditional mobile markets.