Buy, Sell or Hold QCOM Stock? Key Tips Ahead of Q1 Earnings Release

Qualcomm Incorporated QCOM is scheduled to report first-quarter fiscal 2026 earnings on Feb. 4. The Zacks Consensus Estimate for revenues and earnings is pegged at $12.23 billion and $3.37 per share, respectively. Over the past 60 days, earnings estimates for QCOM for fiscal 2026 have declined 1.2% to $12.00 per share, while the same for fiscal 2027 has decreased from $12.60 per share to $12.33.

QCOM Estimate Trend

Earnings Surprise History

The chip manufacturer delivered a four-quarter earnings surprise of 6%, on average, beating estimates on each occasion. In the last reported quarter, the company pulled off an earnings surprise of 4.2%. 

Earnings Whispers

Our proven model does not predict an earnings beat for Qualcomm for the fiscal first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. 

Qualcomm currently has an ESP of -0.42% with a Zacks Rank #4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Shaping the Upcoming Results

During the fiscal first quarter, Qualcomm launched AI200 and AI250 chip-based AI accelerator cards and racks. The leading-edge AI inference optimized solutions for data centers are powered by Qualcomm’s NPU (Neural Processing Unit) technology. Both AI 200 and AI 250 solutions incorporate confidential computing to secure AI workloads, and their direct-cooling features ensure thermal efficiency. Their high memory capacity, affordability, exceptional scale and flexibility for AI inference make them ideal for modern AI data center requirements. This is likely to have generated incremental revenues in the quarter.

In the fiscal first quarter, the company also introduced a leading-edge industrial-grade processor, the Qualcomm Dragonwing IQ-X Series, to support smart manufacturing by enhancing industrial PCs. Leveraging Qualcomm Oryon CPU, the solution is ideal for the rugged and harsh environment of an industrial setup. It offers up to 45 TOPS of AI performance with scalable configurations from 8 to 12 high-performance cores that can operate in a temperature range between -40°C and 105°C. This is likely to have translated into higher revenues in the quarter.

However, Qualcomm landed in the midst of the ongoing trade skirmishes between the United States and China in the fiscal first quarter, with the communist nation launching an antitrust regulation probe against the chipmaker. The investigation has been ordered as Qualcomm reportedly failed to inform China’s market regulator about the buyout of Israel-based Autotalks. The acquisition of this vehicle-to-everything (V2X) communication systems provider in June 2025 was made despite being informed by China's State Administration for Market Regulation that the deal would require its regulatory approval due to sensitive geopolitical issues. With Qualcomm acknowledging its shortcomings, Beijing was quick to pounce on it, initiating a thorough inquiry into whether the U.S. firm violated China's antitrust law.

With one of the biggest footprints in the communist nation by a U.S.-based firm, the market uncertainties remain an overhang on its quarterly performance. Moreover, as China accounts for the lion’s share of Qualcomm’s revenues, any disruption in local operations is bound to have a ripple effect across the company, likely affecting its bottom line.

Price Performance

Over the past year, Qualcomm has declined 12% against the industry’s growth of 41.5%, lagging peers like Hewlett Packard Enterprise Company HPE and Broadcom Inc. AVGO. While Broadcom had gained 49.1%, Hewlett Packard was up 3.8% over this period.

One-Year QCOM Stock Price Performance

Key Valuation Metric

From a valuation standpoint, Qualcomm appears to be relatively cheaper compared to the industry and below its mean. Going by the price/earnings ratio, the company shares currently trade at 12.57 forward earnings, lower than 33.44 for the industry and the stock’s mean of 16.84. 

Investment Considerations

Qualcomm is one of the largest manufacturers of wireless chipsets based on baseband technology. The company is focusing on retaining its leadership in 5G, the chipset market and mobile connectivity with several technological achievements and innovative product launches like AI chips and industrial processors.

Despite efforts to ramp up its AI initiatives, Qualcomm is increasingly finding it difficult to maintain its operations in China. The chip-making firm has a significant presence in more than 12 cities in China. It has been a key supplier of chips and other related components to local smartphone manufacturers like Xiaomi, Huawei and its spin-off brand Honor. However, escalating tariffs and antitrust investigations are raising questions about its long-term viability plans in the communist country. It has also been facing tough competition from Intel in the AI PC market. Shift in the share among OEMs at the premium tier has reduced Qualcomm's near-term opportunity to sell integrated chipsets from the Snapdragon platform.

End Note

With innovative products and a focus on AI chips, Qualcomm is likely to have recorded solid revenues. It appears cheaper relative to the industry. Further, a strong emphasis on quality, diligent execution of operational plans and continuous portfolio enhancements are driving more value for customers. However, stiff competition and softness in key end markets like China are likely to put pressure on the bottom-line growth. Macroeconomic challenges remain a drag. With declining earnings estimates, the stock is witnessing a negative investor perception. Consequently, it might be prudent to avoid the stock at the moment.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research