Why did GAAP EPS decline while non-GAAP EPS grew?

GAAP diluted EPS fell 2% to $2.78 because GAAP results include share-based compensation of $892M in operating income terms (up from $758M), acquisition-related charges of $105M, and a $179M investment-related gain that was excluded from non-GAAP results. Non-GAAP EPS of $3.50 excludes these items, and it rose 3% thanks to lower share count (1,079M diluted vs. 1,122M) and higher non-GAAP operating income of $4.41B versus $4.38B.

How significant is the memory supply constraint for Qualcomm?

Management described the constraint as industry-wide and said it is affecting near-term handset outlook, since handsets are roughly 64% of QCT revenue and about 64% of total revenue would be exposed. The company pointed to continued strength in premium and high-tier smartphone demand. The magnitude of the Q2 impact depends on guidance in the full press release, which is not included in this excerpt.

What does the Alphawave acquisition mean for Qualcomm?

Alphawave Semi is intended to accelerate Qualcomm's expansion into data centers. Goodwill increased by about $2.8B and intangibles by about $0.5B, and cash spent on acquisitions and investments was $1.09B in the quarter. Investors should watch for integration costs, revenue contribution from data center products, and any further impact on the company's acquisition-related excluded items in future quarters.

Is Qualcomm's shareholder return sustainable?

In Q1, Qualcomm returned $3.6B, which is about 73% of operating cash flow of $4.97B. Free cash flow of roughly $4.4B covered the dividend of $949M and buybacks of $2.65B, but returns exceeded free cash flow. Cash fell to $7.2B after restricted cash of $2.3B was released in the prior-period comparison. Sustained returns at this pace will depend on continued cash generation and capital needs for acquisitions.

Are there concerns about concentration in the handset business?

Yes. Handsets generated $7.8B of the $12.25B total, and the forward-looking statements highlight dependence on a small number of customers, premium-tier handset sales, and significant China exposure. Diversification is improving, with automotive and IoT growing faster than handsets this quarter, but the handset business remains the core driver of results.

QCOM 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed February 4, 2026. Cited figures are marked; the original filing is the authoritative source.

Qualcomm (QCOM) reported fiscal Q1 2026 results (quarter ended December 28, 2025) with record total company revenues of $12.25 billion^a, up 5% year over year.

GAAP diluted EPS was $2.78^b, down 2% from $2.83, while non-GAAP diluted EPS rose 3% to $3.50 from $3.41. GAAP net income fell 6% to $3.0 billion, and non-GAAP net income fell 1% to $3.8 billion, reflecting higher share-based compensation and a higher GAAP-to-non-GAAP gap. QCT (chip business) revenue grew 5% to $10.6 billion, led by automotive (+15% to $1.10 billion, the second straight quarter above $1 billion) and IoT (+9% to $1.69 billion), while handsets grew a more modest 3% to $7.82 billion.

QTL (licensing) revenue rose 4% to $1.59 billion^c with a 77% EBT margin. Management flagged a near-term handsets headwind from industry-wide memory supply constraints, though CEO Cristiano Amon said end-consumer demand for premium smartphones remains encouraging and that the company remains on track for its fiscal 2029 revenue goals. The completed acquisition of Alphawave Semi, which lifted goodwill to $14.2 billion from $11.4 billion, is positioned as an expansion into data centers.

Capital returns were $3.6 billion^d in the quarter, including $2.65 billion in buybacks (15 million shares) and $949 million in dividends. Operating cash flow was $4.97 billion, but free cash flow after $549 million of capex was about $4.4 billion.

Investors should weigh the strong top-line and non-GAAP earnings growth against softer GAAP profitability, the memory-driven handset outlook, and the integration risk and balance sheet impact of the Alphawave deal. The filing itself is a press release furnished under Item 2.02, and it contains no forward guidance figures in the excerpt provided, so the Q2 outlook must be checked in the full release.

02—Key points

Key Highlights

Record quarterly revenue of $12.25B, up 5% YoY; QCT revenue up 5% to $10.6B and QTL up 4% to $1.6B.
Non-GAAP diluted EPS of $3.50 (+3% YoY) vs. GAAP diluted EPS of $2.78 (-2% YoY); GAAP net income fell 6% to $3.0B.
Automotive revenue rose 15% to $1.10B, the second consecutive quarter above $1B; IoT grew 9% to $1.69B; handsets grew 3% to $7.82B.
Management cited industry-wide memory supply constraints as a near-term headwind to the handsets outlook, while reaffirming fiscal 2029 revenue goals.
Completed the Alphawave Semi acquisition, expanding into data centers; goodwill rose to $14.2B from $11.4B and intangibles to $1.6B.
Returned $3.6B to stockholders in the quarter ($2.65B buybacks of 15M shares and $949M in dividends at $0.89/share).
Operating cash flow of $4.97B (up from $4.59B) and cash and equivalents of $7.2B; long-term debt steady at $14.8B.

03—Questions

Frequently Asked Questions

Why did GAAP EPS decline while non-GAAP EPS grew?
GAAP diluted EPS fell 2% to $2.78 because GAAP results include share-based compensation of $892M in operating income terms (up from $758M), acquisition-related charges of $105M, and a $179M investment-related gain that was excluded from non-GAAP results. Non-GAAP EPS of $3.50 excludes these items, and it rose 3% thanks to lower share count (1,079M diluted vs. 1,122M) and higher non-GAAP operating income of $4.41B versus $4.38B.
How significant is the memory supply constraint for Qualcomm?
Management described the constraint as industry-wide and said it is affecting near-term handset outlook, since handsets are roughly 64% of QCT revenue and about 64% of total revenue would be exposed. The company pointed to continued strength in premium and high-tier smartphone demand. The magnitude of the Q2 impact depends on guidance in the full press release, which is not included in this excerpt.
What does the Alphawave acquisition mean for Qualcomm?
Alphawave Semi is intended to accelerate Qualcomm's expansion into data centers. Goodwill increased by about $2.8B and intangibles by about $0.5B, and cash spent on acquisitions and investments was $1.09B in the quarter. Investors should watch for integration costs, revenue contribution from data center products, and any further impact on the company's acquisition-related excluded items in future quarters.
Is Qualcomm's shareholder return sustainable?
In Q1, Qualcomm returned $3.6B, which is about 73% of operating cash flow of $4.97B. Free cash flow of roughly $4.4B covered the dividend of $949M and buybacks of $2.65B, but returns exceeded free cash flow. Cash fell to $7.2B after restricted cash of $2.3B was released in the prior-period comparison. Sustained returns at this pace will depend on continued cash generation and capital needs for acquisitions.
Are there concerns about concentration in the handset business?
Yes. Handsets generated $7.8B of the $12.25B total, and the forward-looking statements highlight dependence on a small number of customers, premium-tier handset sales, and significant China exposure. Diversification is improving, with automotive and IoT growing faster than handsets this quarter, but the handset business remains the core driver of results.

04—Continue

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