Key Points
-
Memory chip shortages will pressure smartphone supply this year.
-
Qualcomm is already seeing some OEMs pull back on orders.
-
The good news is that the premium portion of the market could be more resilient to price increases.
- 10 stocks we like better than Qualcomm ›
Smartphone chip giant Qualcomm (NASDAQ: QCOM) reported solid results for the first quarter of fiscal 2026, with revenue rising by 5% year over year and beating expectations. The company’s outlook was another story. Qualcomm expects second-quarter revenue to decline, news that sent the stock spiraling lower on Thursday morning.
The issue for Qualcomm is a severe and worsening shortage of memory chips. “In the coming quarters, the handset industry will be constrained by the availability and pricing of memory, particularly DRAM,” said Qualcomm CEO Cristiano Amon. IDC expects smartphone unit shipments to decline by 1% in 2026 as average selling prices soar.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
The memory situation is bad news for Qualcomm’s core business, but there is a silver lining that investors shouldn’t ignore.
Image source: Getty Images.
What’s going on in the memory chip market?
Tech giants are building AI data centers at a rapid pace, with trillions of dollars likely to be spent on AI infrastructure by 2030. AI servers require standard DRAM and NAND chips, and AI accelerators often use high-bandwidth memory (HBM) chips to unlock additional performance.
A combination of booming demand for all types of memory chips and memory chip manufacturers shifting manufacturing capacity to HBM has created a severe shortage of DRAM chips bound for PCs, smartphones, and other end markets. Building new memory chip manufacturing capacity is a slow process, so this situation is unlikely to improve any time soon.
Amon disclosed during Qualcomm’s earnings call that the memory shortage has led smartphone OEMs, particularly those in China, to take a cautious approach and reduce chipset inventories. This translates into lower sales for Qualcomm, which supplies SoCs to smartphone OEMs.
While other markets, like PCs, will also suffer from the memory shortage, Amon expects the smartphone market to be hit the hardest. “We just wish there was more memory. And the handsets get hit the most given its scale and its cycle time. So we expect the impact is going to be more muted in other business,” Amon said.
A silver lining for Qualcomm
While overall smartphone shipments are likely to decline this year as OEMs scramble to secure memory chips, the premium segment appears more resilient. “…I think the best proxy is what happened during the pandemic. The premium and high tier has proven to be more resilient to price increases,” noted Amon in the earnings call. Amon added, however, that memory availability remained an issue, though he expected OEMs to prioritize premium smartphones.
Despite an expected decline in smartphone shipments this year, IDC expects the total value of those smartphone shipments to reach a record high of $579 billion. For Qualcomm, a mix shift toward higher-end chips could help offset some of the downsides of the memory shortage. The company expects its chips to power 75% of Samsung‘s upcoming family of premium devices, which may still sell well despite potentially higher prices.
Is it time to buy Qualcomm stock?
2026 is unlikely to be a strong year for Qualcomm’s core business, even as the smartphone market shifts toward premium devices. Meaningful additional memory chip manufacturing capacity isn’t coming online anytime soon, and spending on AI infrastructure appears to be accelerating.
Qualcomm stock could be under pressure for a while, but once the memory market stabilizes, the smartphone market should bounce back. This is a temporary issue for Qualcomm, although when it is resolved is anyone’s guess.
Based on the average analyst estimate, Qualcomm stock trades at roughly 12 times forward earnings. Those estimates may come down this year if the memory shortage gets worse. However, at that valuation, Qualcomm stock looks attractive for long-term investors able to wait out the memory crunch.
Should you buy stock in Qualcomm right now?
Before you buy stock in Qualcomm, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Qualcomm wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $443,299!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,136,601!*
Now, it’s worth noting Stock Advisor’s total average return is 914% — a market-crushing outperformance compared to 195% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of February 8, 2026.
Timothy Green has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Qualcomm. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
