Qualcomm’s EPS jumps 153%, helped by a tax gain, but cash flow slips (NASDAQ: QCOM)

What happened

Qualcomm Incorporated (NASDAQ: QCOM) reported fiscal 2026 GAAP EPS of $12.70, up 153% from $5.01. A tax benefit sits inside that number. Revenue, pre-tax income and operating cash flow all fell, while automotive and IoT sales grew.

Fiscal 2026 GAAP revenue was $43.12 billion, down 3% from $44.28 billion in fiscal 2025. Non-GAAP EPS, which leaves out the tax item and other adjustments, fell 12% to $10.54 from $12.03. The year ended Sept. 27, 2026.

In its Nov. 4 release, the company said it renewed long-term QTL license agreements with Apple, Huawei and Transsion. It also announced a multi-generational product collaboration with Amazon for AI data centers. CEO Cristiano Amon said fiscal 2027 marks the start of the company's non-handset revenue inflection.

Key numbers

Metric	Latest	Change	Source
Fiscal 2026 GAAP revenue	$43.12 billion	from $44.28 billion, -3%	SEC 8-K, Exhibit 99.1
Fiscal 2026 GAAP EPS	$12.70	from $5.01, +153%	SEC 8-K, Exhibit 99.1
Fiscal 2026 non-GAAP EPS	$10.54	from $12.03, -12%	SEC 8-K, Exhibit 99.1
Income tax benefit from valuation allowance release (fiscal 2026)	$5.7 billion		SEC 8-K, Exhibit 99.1
Net cash provided by operating activities	$11.15 billion	from $14.01 billion, -20.5%	Calculated from SEC 8-K, Exhibit 99.1
QCT Automotive revenue, fourth quarter	$1.99 billion	from $1.05 billion, +89%	SEC 8-K, Exhibit 99.1

Read more: Qualcomm (QCOM) company research

Where the profit came from

The filing says fiscal 2026 GAAP results included a $5.7 billion income tax benefit, or $5.32 per share. It came from releasing a valuation allowance set up in the fourth quarter of fiscal 2025. The company booked the release in the second quarter of fiscal 2026 because it now expects to use its existing federal deferred tax assets.

That allowance was set up in a quarter with a $6.09 billion tax expense and a GAAP net loss of $3.12 billion. The latest fourth quarter produced GAAP net income of $1.25 billion.

Before taxes, the picture is weaker. Income before income taxes fell 26% to $9.41 billion from $12.66 billion. Operating income dropped to $8.66 billion from $12.36 billion.

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Handsets shrink while automotive and IoT grow

Chip revenue from handsets, the largest QCT line, fell 13% for the year to $24.07 billion from $27.79 billion. In the fourth quarter it dropped 26% to $5.14 billion from $6.96 billion.

For the full year, handsets lost $3.72 billion of revenue. Automotive and IoT together added $2.56 billion. Automotive rose 52% to $6.00 billion, and IoT rose 8% to $7.13 billion. Fourth-quarter automotive revenue reached $1.99 billion, up 89% from $1.05 billion.

QCT pre-tax income fell 13% to $10.10 billion, and its margin slipped to 27% from 30%. The company says industry-wide input costs are rising and it is raising product prices. It expects the full benefit in QCT gross margins in the second half of fiscal 2027.

The licensing unit QTL held steady. Revenue was $5.56 billion against $5.58 billion, with a 72% pre-tax margin in both years.

Cash flow and shareholder returns

Net cash from operating activities fell 20.5% to $11.15 billion from $14.01 billion, by OptimistFi's calculation. Capital spending more than doubled to $2.49 billion from $1.19 billion.

Qualcomm returned $11.67 billion to stockholders in fiscal 2026, through $7.82 billion of buybacks and $3.85 billion of dividends. That was more than operating cash flow for the year.

Cash and cash equivalents ended at $4.64 billion, down from $5.52 billion. Inventories rose to $8.64 billion from $6.53 billion, and the cash flow statement shows inventories used $2.05 billion of cash.

Why it matters

OptimistFi has argued that Qualcomm turns licensing royalties and chip sales into free cash flow that pays for research and shareholder returns. This report supports the licensing half, since QTL held its margin and the Apple, Huawei and Transsion agreements were renewed. It strains the cash half.

The tax benefit flatters GAAP earnings, and non-GAAP EPS finished below the prior year. The filing also lists reliance on a few mobile handset customers and licensees, and a large share of business in China, among its risks. Handset weakness is the main test of whether automotive, IoT and data center growth can offset it.

What's next

Qualcomm guided first-quarter fiscal 2027 revenue to $10.4 billion to $11.2 billion, with QCT at $9.0 billion to $9.6 billion and QTL at $1.3 billion to $1.5 billion. Non-GAAP diluted EPS is guided to $2.15 to $2.35, and GAAP diluted EPS to $1.03 to $1.23. The guidance now includes Data Center.

For fiscal 2027, the company projects non-handset revenue growth of more than 60% and reiterated its $5 billion Data Center revenue target. The next quarterly report will show whether revenue lands in the guided range and whether Data Center begins to contribute. Handset declines that outrun that growth would weaken the case.

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