Qualcomm FQ4 & FY 2025 – Elephant Watching

Data centre is the elephant the market is ignoring.

• Qualcomm reported another set of good results, but the real story is that substantial data centre revenues are now within the investment forecast horizon, making it quite clear that the market’s numbers remain too low.
• FQ4 2025 revenues / Adj-EPS were $11.3bn / $3.00, nicely ahead of estimates of $10.8bn / $2.87.
• All of the end markets performed wel,l as there is a market shift towards higher-end smartphones generally, while Qualcomm continued to gain share in end markets such as automotive and IoT.
• This is what underpinned the 13% YoY growth for FQ4 and 16% YoY for the full year ended in September 2025.
• Guidance for the coming quarter was also good with revenues / Adj-EPS of $11.8bn – $12.6bn ($12.2bn) / $3.30 – $3.50 ($3.4) both of which are nicely ahead of consensus of consensus of $11.6bn / $3.32.
• This is driven by a continuation of the factors we have seen in the last quarter and for the balance of the year, but this is not where I think the real action will be.
  • First, data centre: where substantial revenues are now expected to materialise in FY 2027 rather than FY 2028 as previously guided.
  • This now fits with Humain’s roll-out plan, which will be using Qualcomm’s A200/A250 product for up to 200mW of data centre capacity.
  • On its own, and assuming similar pricing to AMD, equates to $2bn of incremental revenues that are not included anywhere in the company’s or the market’s forecasts.
  • Furthermore, I suspect that there is also a hyperscaler very close to signing, which again, could be billions of dollars of revenue if the deal is closed.
  • Hence, it is pretty easy to see how this product could become substantial in a relatively short period of time, that is now well within Wall Street’s forecast period.
  • Qualcomm would not be drawn into much detail at this time on this product, but promised more in an investor update in early 2026.
  • Second, PCs: where the numbers are still being low-balled in my opinion, as the $4bn in forecasted revenues by 2029 equates to roughly 10% of the laptop market.
  • Given how much better these products are compared to x86 when the device is on battery power, I think 10% will be handsomely beaten over the next 4 years.
  • Hence, these numbers are also much too low in my opinion.
  • Third, ADAS: where much has been made of the new ADAS stack developed with BMW, but I am a bit more sceptical.
  • This is because the automotive industry has a habit of acting against its own best interest simply because it does not want to use the same technology as a competitor, regardless of whether it makes any difference.
  • However, the $22bn automotive and IoT forecast does not include material traction from the ADAS Stack outside of BM,W meaning that if the company gets traction, that will add to this number.
  • There is traction from smaller OEMs, and with this being the only non-Chinese stack available in this format from a major company, it has some merit by which to get some of the larger car makers on board.
• The net result is that with the core business of smartphones chugging along nicely, there is a solid foundation for the diversification which looks to me to be ahead of schedule.
• Consensus has 1.9% YoY of growth in EPS for FY 2026 with a further 5% YoY in FY 2027, which now looks silly.  
• Qualcomm is showing good evidence of growing nicely beyond the mature smartphone market, and none of this is in the numbers.
• Combine this with a PER of 14.3x FY 2026 and 13.5x 2027 PER it is not very hard to see both multiple expansion and estimate increases giving a strong rally in the shares.
• I have a position, and my inclination is to buy more after these numbers.