QUALCOMM Incorporated
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Item 1. Business
We incorporated in California in 1985 and reincorporated in Delaware in 1991. We operate and report using a 52-53 week fiscal year ending on the last Sunday in September. Our 52-week fiscal years consist of four equal fiscal quarters of 13 weeks each, and our 53-week fiscal years consist of three 13-week fiscal quarters and one 14-week fiscal quarter. The financial results for our 53-week fiscal years and our 14-week fiscal quarters will not be exactly comparable to our 52-week fiscal years and our 13-week fiscal quarters. Our fiscal years for 2025, 2024 and 2023 included 52 weeks, 53 weeks and 52 weeks, respectively. Our fiscal year for 2026 will include 52 weeks.
Overview
We are a global technology leader, helping to bring intelligent computing everywhere through the development and commercialization of foundational technologies, including on-device artificial intelligence (AI), high-performance and low-power computing and advanced wireless connectivity. Our platforms help power intelligent devices that people and businesses rely on every day across industries and applications from handsets to other areas, including automotive and the internet of things (IoT). In automotive, our Snapdragon® Digital Chassis™ platforms, including connectivity, digital cockpit and advanced driver assistance and automated driving (ADAS/AD), are helping to connect the car to its environment and the cloud, creating unique in-cabin experiences and enabling a comprehensive assisted and automated driving solution. In IoT, our inventions have helped power technology advancements in industries and applications such as consumer (including personal computers (PCs), extended reality (XR) and other personal computing devices), edge networking (including mobile broadband and wireless access points) and industrial (including handhelds, retail, tracking and logistics and utilities). We derive revenues principally from sales of integrated circuit products, including our Snapdragon® and Qualcomm Dragonwing™ families of highly-integrated, system-based solutions, and licensing of our intellectual property, including patents and other rights.
The foundational technologies we invent help power modern digital experiences. We share these inventions broadly through our licensing programs enabling wide ecosystem access to technologies at the core of mobile innovation, and through the sale of our integrated circuit platforms (also known as integrated circuit products, chips, chipsets or modules) and other products. We innovate and collaborate across many ecosystems, including with manufacturers, operators, developers, system integrators, infrastructure vendors, cloud providers, test tool vendors, service providers, governments and industry standards organizations, to enable next-generation digital transformation. For 40 years, we have been a leader in helping set industry standards and creating era-defining technology breakthroughs, and we continue to play a leading role in developing system-level inventions that serve as the foundation for multiple generations of advanced wireless technologies.
We own significant intellectual property, including patents, patent applications and trade secrets, applicable to products that implement cellular technologies (including 4G (fourth generation) and/or 5G (fifth generation)), which are the primary digital technologies currently used to transmit voice and data over radio waves using a public or private cellular wireless network. We also develop and commercialize numerous other key technologies used in mobile and other devices and services, and we own substantial intellectual property related to these technologies. Some of these inventions are contributed to and commercialized as industry standards, such as for certain video and audio codecs, Wi-Fi, position location, UWB
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(ultra-wideband), memory and component interconnect. We have also developed other technologies that are used by wireless and other devices that are not related to industry standards, such as user interfaces, graphics and image processing functionality, RF (radio frequency), RFFE (radio frequency front-end) and antenna designs, AI and machine learning techniques and application processor architectures, among other technologies.
We are organized on the basis of products and services and have three reportable segments. We conduct business primarily through our QCT (Qualcomm CDMA Technologies) semiconductor business and our QTL (Qualcomm Technology Licensing) licensing business. QCT develops and supplies integrated circuit platforms and system software with advanced connectivity and high-performance, low-power computing technologies for use in mobile devices; automotive systems for connectivity, digital cockpit and ADAS/AD; and IoT including consumer electronic devices, industrial devices and edge networking products. QTL grants licenses or otherwise provides rights to use portions of our intellectual property portfolio, which includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products. Our QSI (Qualcomm Strategic Initiatives) reportable segment makes strategic investments. We also have nonreportable segments, including QGOV (Qualcomm Government Technologies) and our Data Center business (formerly referred to as our cloud computing processing initiative).
Industry Trends
As the largest technology platform in the world, mobile has transformed the way we connect, compute and communicate. Our breakthrough inventions and licensing programs have been integral to the demand and evolution of the mobile industry. On-device AI, high-performance, low-power computing and advanced wireless connectivity technologies are also impacting many industries beyond mobile, empowering new services, new business models and new ways to engage and interact with customers.
Artificial Intelligence. Advancements in processor technologies have enabled the distribution and coordination of complex workloads across the cloud and edge devices to provide enhanced performance and efficiency across use cases. Given the proximity to raw data, edge device computing allows for more context-aware processing, reducing response time, improving privacy and security, and enabling greater personalization. With increased processing power, smartphones and PCs are becoming pervasive AI platforms, with complex, large generative AI algorithms running on-device, enabling on-demand and contextual AI use cases at a fraction of the energy required by cloud-based applications. As wireless connectivity complements on-device generative AI, edge devices enable enhanced productivity use cases, while intelligently processing and sharing data with cloud-based applications as needed. Building on the smartphone and PC foundation, we envision AI becoming ubiquitous and evolving as the new user interface, as it continues to expand into industries and applications such as industrial IoT, XR and automotive. Industry momentum is driving the emergence of new personal AI devices, such as smart glasses, earbuds and other wearables, that allow new agentic AI and context-aware experiences. These personal AI devices are expected to evolve independently of the smartphone ecosystem. At the same time, physical and industrial AI are beginning to reshape industries and provide new opportunities from robotics to manufacturing, logistics and energy, through embedded intelligence and enabling automation, real-time insights, autonomous systems and adaptive decision-making at the edge.
Significant investment continues across many industries in the development of complex large language models (LLMs), more tailored small language models (SLMs), large vision models (LVMs), large multimodal models (LMMs) and other generative AI models, which are changing the landscape of the user experience. LLMs and SLMs (e.g., GPT-4o and Llama3) are used for text-based natural language processing applications such as answering queries, document summarization and creation; LVMs (e.g., Stable Diffusion and ControlNet) are used for image and video processing; and LMMs are used to understand and process multiple types of data inputs or modalities such as text, images, audio and video. They are disrupting traditional methods of search, content creation, recommendation systems and personalized digital assistants, offering significant enhancements in consumer utility and productivity, changing the human-computer interface and evolving agentic AI experiences. While these generative AI models are developed primarily for use in the cloud, we believe that the variety of innovative enterprise and consumer use cases that have emerged and will continue to emerge from generative AI must run on-device to maximize their utility, and bring the benefits of immediacy, privacy, security and personalization to consumers. We expect continued advancement in the generative AI capabilities of edge devices and increased adoption of generative AI capable technologies in handsets and other edge devices. We also expect companies and regulators will continue to focus on responsible AI, data privacy and security to ensure the responsible development and deployment of these technologies.
Advancing Connectivity. 3G (third generation) cellular technology introduced the world to the potential of the mobile internet, and the ability to access the internet virtually anytime and anywhere. 4G brought mobile broadband speeds that helped fuel the smartphone era, forever changing the way we work, live and connect with others, and has served as the technology foundation for many of the applications and services used today, including e-commerce, video streaming, video calling, social media and gaming.
Building on foundational innovations developed for 3G and 4G, the mobile industry continues to transition to 5G technology as 5G network deployments and device launches continue, particularly in emerging regions. 5G is designed to support multi-gigabit data rates, low latency and greater capacity than previous generations of mobile technology to enable enhanced mobile broadband experiences, including ultra-high definition (4K) video streaming and sharing, near-instantaneous access to cloud services, immersive cloud gaming and XR experiences, including augmented reality, virtual reality and mixed reality. 5G’s performance and capacity improvements are also enabling operators to offer new consumer
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and enterprise services. 5G Advanced builds upon the initial 5G standards to enhance system capabilities and expand into new use cases. It introduces key improvements for continued 5G commercialization, supports a range of services beyond mobile broadband, and lays the groundwork for 6G (sixth generation). 5G Advanced is a transformative step, integrating AI-enabled device performance and network performance advancements, satellite communications and lower cost devices to drive innovation across the 5G ecosystem.
Consumer Demand for Smartphones. For calendar year 2025, we estimate that consumer demand for smartphones will remain approximately flat relative to calendar year 2024. This estimate includes expected mid single-digit percentage growth in 5G handsets.
AI use in smartphones is increasing, and as we look forward, we expect on-device and agentic AI use cases will continue to expand and reshape the mobile industry. Additionally, consumer demand for new experiences, combined with the needs of mobile operators and device manufacturers to provide differentiated features and services, is driving continued innovation within the smartphone across AI, connectivity, processing, multimedia, imaging, audio and more. As a result, the smartphone continues to be the go-to device for social networking, music and video streaming, photography and video capture, e-commerce, gaming, email, web browsing and more. We believe that the combination of AI and cellular technology (such as 5G) will increasingly enable these experiences to be more immersive, intuitive and interactive.
Automotive. Digitalization of the automotive cockpit, including wireless connectivity, continues to transform the in-vehicle experience, enabling greater personalization of content and settings for both drivers and passengers as automakers respond to growing interest from consumers to bring their digital lifestyles into the vehicle. Car-to-cloud platforms are designed to help automakers improve cost efficiencies, create new service opportunities throughout the lifecycle of a vehicle with over-the-air update capabilities and gather valuable vehicle and usage analytics. This is driving the development of a new architecture for the software-defined vehicle. According to analyst data, 68% of new vehicles produced in 2030 are projected to have embedded cellular connectivity, with 48% of new vehicles featuring 5G connectivity compared to 21% in 2025 (TechInsights, July 2025). Building on this foundation, AI is helping further transform the next generation of vehicles by embedding intelligence that enables vehicles to actively learn from their environments to support safety, optimize vehicle energy efficiency and provide features such as interactive in-vehicle assistance that personalize the driving and passenger experience. In addition, high-performance, low-power computing technologies, with added security and safety required for automotive products, are being used to improve vehicles with ADAS/AD features that we expect to scale across vehicle tiers and continue the progression toward higher levels of autonomy, safety and convenience. Analysts estimate that the share of new light duty vehicles sold globally with Level 2 (i.e., partial driving automation) or higher autonomy will grow from 24% in 2025 to 52% in 2030 (TechInsights, November 2024).
IoT. Industry demand for IoT devices is expected to remain strong across consumer, edge networking and industrial applications, in part due to expanded use cases enabled by 5G and AI technologies, including generative AI.
Consumer. Consumer IoT products, including PCs, XR and other personal computing devices, continue to adopt the latest mobile connectivity, processing and intelligence technologies including on-device AI capabilities. This enables new services, applications and experiences that can be run directly on the device, driving improvements in latency, cost and privacy. For example, AI-focused PCs, including those powered by our Snapdragon X Series platforms, allow for increased productivity and enhanced use cases enabled by on-device AI processing at low power. Additionally, smart glasses and wearables, such as smartwatches, earbuds and other form factors are being transformed into personal AI devices as they transition from simply extending smartphone experiences to providing new and unique personalized AI, connecting the user directly to the AI agent and model.
Edge Networking. Advances in wireless technology are helping to drive demand for edge networking products (including mobile, fiber broadband and wireless access points). Fiber and 5G technologies continue to grow, delivering not only high speed broadband and infrastructure but also providing the flexibility to support fixed, mobile and fixed wireless users with the delivery of high-performance, low-latency connections. Additionally, advancements in Wi-Fi are driving consumer and enterprise demand for the latest Wi-Fi 6, 6E and 7 access point technologies that leverage increased network speed, capacity and efficiency to support the increased number of connected devices at home and at work.
Industrial. The combination of IoT devices with connectivity, edge-computing, on-device AI and power-optimized and/or precise location tracking, along with cloud capabilities, is driving advancements in industries such as retail, transportation logistics, manufacturing, energy and utilities, smart home and video. These technologies allow companies to gain new knowledge and insights about their products and services, manufacturing and logistics processes, which can help to transform and optimize their businesses by improving safety, surveillance, efficiency and customer experiences. A key enabler of this shift is physical AI, which is reshaping industrial applications and creating new opportunities, particularly in areas like manufacturing and robotics.
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Technology Overview
The worldwide demand for intelligent computing everywhere requires continuous innovation to improve user experiences, support new services, expand on-device processing and AI capabilities at low power, and increase wireless connectivity capacity and performance. To meet these requirements, different foundational technologies, including wireless communications, high-performance and low-power computing, AI, multimedia and location, continue to evolve. We have a long history of investing heavily in research and development and have developed many of these foundational technologies that help drive the continued evolution in mobile, automotive and IoT. We have also developed and acquired (and continue to develop and acquire) significant related intellectual property. This intellectual property has been incorporated into the most widely accepted and deployed cellular wireless communications technology standards, and we have licensed it to hundreds of companies.
Intelligent Computing. Our processors are purpose-built to elevate computing experiences across mobile, automotive and IoT. We have developed System-on-Chip (SoC) architecture with heterogeneous computing features, which uses our central processing unit (CPU) and different types of specialized engines (graphics processing unit (GPU) and neural processing unit (NPU)) to enable high-performance and low-power computing and other optimization techniques. Our Qualcomm Oryon™ and Qualcomm® Kryo™ CPU processors deliver enhanced security and AI solutions, designed to enable the next generation of high-tech devices and apps. Qualcomm Oryon CPU core technology is custom-designed to deliver a new level of performance and efficiency and developed to be integrated across a wide portfolio of Snapdragon powered products from certain PC and smartphone products to certain automotive platforms and IoT products. We also intend to leverage our custom-designed CPU cores as we create our data center products. Our Qualcomm® Adreno™ GPUs are designed to deliver high quality graphics performance for visually rich 3D gaming and user interfaces.
The Qualcomm® AI Engine, featured in our Snapdragon platforms and many of our other products, includes dedicated hardware capable of running complex AI use cases at high performance and low power on device, while also enhancing privacy and security. Our Qualcomm® Hexagon™ NPU is a key processor in our AI Engine and is designed for sustained, high-performance AI inference, enabling leading on-device AI capabilities with very low power consumption. In addition to our leading AI technology, we are simplifying the process for developers to build applications with AI features to work on our platforms. The Qualcomm® AI Stack is a unified AI software portfolio designed to help developers optimize and deploy AI models quickly using our chipset solutions by supporting AI frameworks and runtimes, developer libraries, system software and popular operating systems. We also offer certain resources, including the Qualcomm® AI Hub, that allow developers to access resources for quickly deploying models on devices powered by our platforms, whether their own or from a growing collection of pre-optimized, ready-to-use AI models.
Cellular Wireless Technologies. The majority of cellular connections today are OFDMA (Orthogonal Frequency Division Multiple Access)-based technologies. 5G heavily leverages OFDMA-based technologies, while most of the OFDMA-based technologies deployed prior to 2020 are classified as 4G technology, including LTE (Long-Term Evolution).
5G is designed to transform the role of wireless technologies and incorporates advancements on 3G/4G features, including device-to-device capabilities. 5G has the ability to target diverse services with very different technical requirements (from enhanced mobile broadband to massive IoT to mission-critical communications), utilize diverse types of spectrum (from low bands to millimeter wave (mmWave) bands) and support diverse types of deployment scenarios. Predominant technological components of 5G include ultra-reliable, low-latency communication, very wide channel bandwidth and new channel coding schemes to efficiently support large data blocks, MIMO (multiple input, multiple output) to increase coverage and network capacity and mobile mmWave to increase the data rate offered to users. As with previous cellular generations, 5G is designed to support seamless compatibility with 3G/4G technologies through multimode devices.
Many of our inventions at the core of 3G and 4G serve as the foundational technologies for 5G. We continue to play a significant role in driving advancements in 5G, including contributing to 3GPP (3rd Generation Partnership Project, a global organization that develops technical specifications) standardization activities that are defining the continued evolution of 5G through the specification of the radio component (NR) and the core network component (5G Core or 5GC) into 5G Advanced, as well as working to establish the requirements for 6G.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This information should be read in conjunction with the condensed consolidated financial statements and the notes thereto included in “Part I, Item 1” of this Quarterly Report and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal year ended September 28, 2025 contained in our 2025 Annual Report on Form 10-K.
This Quarterly Report (including but not limited to this section titled Management’s Discussion and Analysis of Financial Condition and Results of Operations) contains forward-looking statements. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “may,” “will,” “would” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this Quarterly Report. Additionally, statements concerning future matters such as our future business, prospects, results of operations or financial condition; research and development or technology investments; new or enhanced products, services or technologies; emerging industries or business models; design wins or product launches; industry, market or technology trends, dynamics or transitions; our expectations regarding future demand or supply conditions; strategic investments or acquisitions, and the anticipated timing or benefits thereof; legal or regulatory matters, including the expected impacts of recently enacted or pending tax or other regulatory changes; U.S./China trade or national security tensions; vertical integration by our customers; competition; annual effective tax rates; and other statements regarding matters that are not historical are also forward-looking statements.
Although forward-looking statements in this Quarterly Report reflect our good faith judgment, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include without limitation those discussed under the heading “Risk Factors” below, as well as those discussed elsewhere in this Quarterly Report. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
Second Quarter Fiscal 2026 Overview
Revenues for the second quarter of fiscal 2026 were $10.6 billion, a decrease of 3% compared to the year ago quarter, with net income of $7.4 billion, an increase of 162% compared to the year ago quarter. Key items from the second quarter of fiscal 2026 included:
•QCT revenues decreased by 4% in the second quarter of fiscal 2026 compared to the year ago quarter due to lower handset revenues, partially offset by higher automotive and IoT revenues.
•QTL revenues increased by 5% in the second quarter of fiscal 2026 compared to the year ago quarter, primarily due to an increase in estimated revenues per unit, which was primarily driven by favorable mix.
•We recorded a $5.7 billion income tax benefit to release a valuation allowance in the second quarter of fiscal 2026 as we now expect to realize substantially all of our existing federal deferred tax assets as a result of additional guidance issued on corporate alternative minimum tax (CAMT) by the U.S. Department of Treasury and the Internal Revenue Service.
Our Business and Operating Segments
We develop and commercialize foundational technologies and products used across industries and applications from mobile devices to other areas including automotive and the internet of things (IoT). We derive revenues principally from sales of integrated circuit products and licensing our intellectual property, including patents and other rights.
We are organized on the basis of products and services and have three reportable segments. We conduct business primarily through our QCT (Qualcomm CDMA Technologies) semiconductor business and our QTL (Qualcomm Technology Licensing) licensing business. Our QSI (Qualcomm Strategic Initiatives) reportable segment makes strategic investments. We also have nonreportable segments, including QGOV (Qualcomm Government Technologies) and our Data Center business.
Our reportable segments are operated by QUALCOMM Incorporated and its direct and indirect subsidiaries. Substantially all of our products and services businesses, including QCT, and substantially all of our engineering and research
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and development functions are operated by Qualcomm Technologies, Inc. (QTI), a subsidiary of QUALCOMM Incorporated, and QTI’s subsidiaries. QTL is operated by QUALCOMM Incorporated, which owns the vast majority of our patent portfolio. Neither QTI nor any of its subsidiaries has any right, power or authority to grant any licenses or other rights under or to any patents owned by QUALCOMM Incorporated.
Seasonality. Many of our products and much of our intellectual property are incorporated into consumer wireless devices, which are subject to seasonality and other fluctuations in demand. Our revenues have historically fluctuated based on consumer demand for devices, as well as on the timing of customer/licensee device launches and/or innovation cycles (such as the transition to the next generation of wireless technologies). This has resulted in fluctuations in QCT revenues in advance of and during device launches incorporating our products and in QTL revenues when licensees’ sales occur. These trends may or may not continue in the future. Further, the trends for QTL have been, and may in the future be, impacted by disputes and/or resolutions with licensees and/or governmental investigations or proceedings.
Results of Operations
Revenues (in millions) | ||||||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||
| March 29, 2026 | March 30, 2025 | Change | March 29, 2026 | March 30, 2025 | Change | |||||||||||||||||||||||||||||
| Equipment and services | $ | 9,060 | $ | 9,359 | $ | (299) | $ | 19,526 | $ | 19,301 | $ | 225 | ||||||||||||||||||||||
| Licensing | 1,539 | 1,620 | (81) | 3,325 | 3,348 | (23) | ||||||||||||||||||||||||||||
| $ | 10,599 | $ | 10,979 | $ | (380) | $ | 22,851 | $ | 22,649 | $ | 202 | |||||||||||||||||||||||
Second quarter 2026 vs. 2025
The decrease in revenues in the second quarter fiscal 2026 was primarily due to:
- $393 million in lower equipment and services revenues from our QCT segment
- $143 million in licensing revenues from a settlement of a licensing dispute in the second quarter of fiscal 2025, which was not allocated to our segment results
+ $97 million in higher equipment and services revenues from our Data Center segment, primarily driven by our acquisition of Alphawave in the first quarter of fiscal 2026
+ $63 million in higher licensing revenues from our QTL segment
First six months 2026 vs. 2025
The increase in revenues in the first six months of fiscal 2026 was primarily due to:
+ $135 million in higher equipment and services revenues from our QCT segment
+ $120 million in higher licensing revenues from our QTL segment
+ $94 million in higher equipment and services revenues from our Data Center segment, primarily driven by our acquisition of Alphawave in the first quarter of fiscal 2026
- $143 million in licensing revenues from a settlement of a licensing dispute in the second quarter of fiscal 2025, which was not allocated to our segment results
| Costs and Expenses (in millions, except percentages) | ||||||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||
| March 29, 2026 | March 30, 2025 | Change | March 29, 2026 | March 30, 2025 | Change | |||||||||||||||||||||||||||||
| Cost of revenues | $ | 4,900 | $ | 4,937 | $ | (37) | $ | 10,468 | $ | 10,098 | $ | 370 | ||||||||||||||||||||||
| Gross margin | 54 | % | 55 | % | 54 | % | 55 | % | ||||||||||||||||||||||||||
Second quarter and first six months 2026 vs. 2025
Gross margin percentage decreased in the second quarter and first six months of fiscal 2026 primarily due to a decrease in QCT gross margin percentage.
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| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||
| March 29, 2026 | March 30, 2025 | Change | March 29, 2026 | March 30, 2025 | Change | |||||||||||||||||||||||||||||
| Research and development | $ | 2,463 | $ | 2,216 | $ | 247 | $ | 4,915 | $ | 4,446 | $ | 469 | ||||||||||||||||||||||
| % of revenues | 23 | % | 20 | % | 22 | % | 20 | % | ||||||||||||||||||||||||||
Second quarter 2026 vs. 2025
The increase in research and development expenses in the second quarter of fiscal 2026 was primarily due to:
+ $177 million increase driven by higher costs related to the development of wireless and integrated circuit technologies (including investments in key growth and diversification opportunities), primarily driven by an increase in employee-related expenses and lower non-recurring engineering cost reimbursements for product-related development work
+ $83 million increase in share-based compensation expense
First six months 2026 vs. 2025
The increase in research and development expenses in the first six months of fiscal 2026 was primarily due to:
+ $298 million increase driven by higher costs related to the development of wireless and integrated circuit technologies (including investments in key growth and diversification opportunities), primarily driven by an increase in employee-related expenses
+ $168 million increase in share-based compensation expense
We expect to continue investing in key growth and diversification initiatives. The increase in our share-based compensation expense includes the replacement of our annual cash incentive awards for fiscal 2026 and 2027 with a two-year equity award for our broader non-executive leadership team. This approach is designed to motivate and retain our team to execute our long-term diversification strategy, while further aligning their compensation with the interests of our stockholders.
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||
| March 29, 2026 | March 30, 2025 | Change | March 29, 2026 | March 30, 2025 | Change | |||||||||||||||||||||||||||||
| Selling, general and administrative | $ | 898 | $ | 706 | $ | 192 | $ | 1,763 | $ | 1,430 | $ | 333 | ||||||||||||||||||||||
| % of revenues | 8 | % | 6 | % | 8 | % | 6 | % | ||||||||||||||||||||||||||
Second quarter 2026 vs. 2025
The increase in selling, general and administrative expenses in the second quarter of fiscal 2026 was primarily due to:
+ $72 million increase in share-based compensation expense
+ $44 million increase in acquisition-related expenses
First six months 2026 vs. 2025
The increase in selling, general and administrative expenses in the first six months of fiscal 2026 was primarily due to:
+ $123 million increase in share-based compensation expense
+ $84 million increase in acquisition-related expenses
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Interest Expense and Investment and Other Income, Net (in millions) | |||||||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| March 29, 2026 | March 30, 2025 | Change | March 29, 2026 | March 30, 2025 | Change | ||||||||||||||||||||||||||||||
| Interest expense | $ | 171 | $ | 163 | $ | 8 | $ | 341 | $ | 326 | $ | 15 | |||||||||||||||||||||||
| Investment and other income, net | |||||||||||||||||||||||||||||||||||
| Interest and dividend income | $ | 113 | $ | 167 | $ | (54) | $ | 250 | $ | 336 | $ | (86) | |||||||||||||||||||||||
| Net (losses) gains on marketable securities | (64) | 18 | (82) | (120) | 37 | (157) | |||||||||||||||||||||||||||||
| Net gains (losses) on other investments | 7 | (5) | 12 | 217 | 26 | 191 | |||||||||||||||||||||||||||||
| Net losses on deferred compensation plan assets | (56) | (34) | (22) | (13) | (20) | 7 | |||||||||||||||||||||||||||||
| Impairment losses on other investments | (12) | (16) | 4 | (23) | (41) | 18 | |||||||||||||||||||||||||||||
Equity in net earnings of investees | 44 | 18 | 26 | 83 | 16 | 67 | |||||||||||||||||||||||||||||
| Other | 62 | — | 62 | 50 | 37 | 13 | |||||||||||||||||||||||||||||
| $ | 94 | $ | 148 | $ | (54) | $ | 444 | $ | 391 | $ | 53 | ||||||||||||||||||||||||
Net losses on marketable securities in the second quarter and first six months of fiscal 2026 was primarily driven by the change in fair value of certain of our QSI marketable equity investments.
Net gains on other investments in the first six months of fiscal 2026 was primarily driven by observable price changes on certain of our QSI non-marketable equity investments.
Income Tax Expense (in millions, except percentages)
The following table summarizes the primary factors that caused our income tax provision to differ from the expected income tax provision at the U.S. federal statutory rate:
| Three Months Ended | Six Months Ended | |||||||||||||||||||||
| March 29, 2026 | March 30, 2025 | March 29, 2026 | March 30, 2025 | |||||||||||||||||||
| Expected income tax provision at federal statutory tax rate | $ | 469 | $ | 652 | $ | 1,214 | $ | 1,415 | ||||||||||||||
Benefit of releasing valuation allowance on federal deferred tax assets | (5,724) | — | (5,724) | — | ||||||||||||||||||
| Benefit from foreign-derived deduction eligible income (FDDEI) | (88) | (300) | (296) | (660) | ||||||||||||||||||
Foreign currency loss (gain) related to foreign withholding tax receivable | 63 | (1) | 121 | 165 | ||||||||||||||||||
| Benefit related to the federal research and development tax credit | (26) | (45) | (98) | (119) | ||||||||||||||||||
Excess tax deficiency (benefit) associated with share-based awards | 11 | (39) | (18) | (77) | ||||||||||||||||||
| Other | 157 | 26 | 205 | 24 | ||||||||||||||||||
| Income tax (benefit) expense | $ | (5,138) | $ | 293 | $ | (4,596) | $ | 748 | ||||||||||||||
| Effective tax rate | (230 | %) | 9 | % | (80 | %) | 11 | % | ||||||||||||||
We estimate our annual effective income tax rate to be 40% benefit for fiscal 2026, which is lower than the U.S. federal statutory rate. Additional information regarding our annual effective income tax rate and income tax expense is provided in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 3. Income Taxes.”
In the fourth quarter of fiscal 2025, tax reform legislation included in the One Big Beautiful Bill Act (OBBB) was enacted in the United States. The OBBB included significant corporate tax reforms, including changes to the foreign-derived deduction eligible income (FDDEI) regime and changes allowing domestic research and development (R&D) expenditures to be deducted as incurred beginning in fiscal 2026 (under prior law such expenditures were capitalized and amortized over five years). As a result, we expected to be perpetually subject to CAMT and established a $5.7 billion valuation allowance on our federal deferred tax assets in fiscal 2025.
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In the second quarter of fiscal 2026, the U.S. Department of Treasury and the Internal Revenue Service issued Notice 2026-07, which, among other items, allows us to reduce CAMT by certain previously capitalized domestic R&D expenditures. As a result, we no longer expect to be subject to CAMT in the foreseeable future, and therefore, we now expect to realize our existing federal deferred tax assets. Accordingly, we released our valuation allowance on our federal deferred tax assets resulting in a $5.7 billion income tax benefit in the second quarter of fiscal 2026. Changes in future taxable income, tax laws and other factors may change our determination regarding whether we will be able to realize our deferred tax assets.
Unrecognized tax benefits were $2.9 billion and $2.7 billion at March 29, 2026 and September 28, 2025, respectively. We believe that it is reasonably possible that our unrecognized tax benefits will change within the next twelve months.
Segment Results
The following should be read in conjunction with our financial results for the second quarter of fiscal 2026 for each reportable segment included in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 6. Segment Information.”
QCT Segment (in millions, except percentages)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||
| March 29, 2026 | March 30, 2025 | Change | March 29, 2026 | March 30, 2025 | Change | |||||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||||
Handsets | $ | 6,024 | $ | 6,929 | $ | (905) | $ | 13,848 | $ | 14,503 | $ | (655) | ||||||||||||||||||||||
Automotive | 1,326 | 959 | 367 | 2,427 | 1,920 | 507 | ||||||||||||||||||||||||||||
IoT (internet of things) | 1,726 | 1,581 | 145 | 3,414 | 3,130 | 284 | ||||||||||||||||||||||||||||
Total revenues (1) | $ | 9,076 | $ | 9,469 | $ | (393) | $ | 19,689 | $ | 19,553 | $ | 136 | ||||||||||||||||||||||
EBT (2) | $ | 2,465 | $ | 2,857 | $ | (392) | $ | 5,767 | $ | 6,103 | $ | (336) | ||||||||||||||||||||||
| EBT as a % of revenues | 27 | % | 30 | % | -3 points | 29 | % | 31 | % | -2 points | ||||||||||||||||||||||||
(1) Descriptions of our three QCT revenue streams can be found in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 2. Composition of Certain Financial Statement Items.”
(2) Earnings before income taxes.
Substantially all of QCT’s revenues consist of equipment and services revenues, which were $8.9 billion and $9.3 billion in the second quarter of fiscal 2026 and 2025, respectively, and $19.3 billion and $19.2 billion in the first six months of fiscal 2026 and 2025, respectively. QCT revenues mostly relate to sales of our Snapdragon and Dragonwing platforms (which include processors and modems), stand-alone Mobile Data Modems, radio frequency transceiver, power management and wireless connectivity integrated chipsets as well as sales of 4G, 5G sub 6 and 5G millimeter wave RFFE products.
Second quarter 2026 vs. 2025
The decrease in QCT revenues in the second quarter of fiscal 2026 was primarily due to:
- lower handsets revenues, primarily due to lower chipset shipments to certain major OEMs (primarily driven by customers adjusting build plans to reduce their inventory levels as a result of the negative effects of recent memory supply constraints and related price increases)
+ higher automotive revenues, due to $191 million in higher shipments primarily from new vehicle launches with our Snapdragon digital cockpit and advanced driver assistance and automated driving (ADAS/AD) products and a $176 million increase in revenues per unit driven by favorable mix and higher average selling prices
+ higher IoT revenues, primarily due to an increase in revenues per unit primarily driven by favorable mix
QCT EBT as a percentage of revenues decreased in the second quarter of fiscal 2026 primarily due to:
- higher operating expenses, primarily driven by higher research and development and selling, general and administrative expenses
- lower gross margin, primarily driven by higher product cost, partially offset by higher average selling prices
- lower revenues
First six months 2026 vs. 2025
The increase in QCT revenues in the first six months of fiscal 2026 was primarily due to:
+ higher automotive revenues, due to $328 million in higher shipments primarily from new vehicle launches with our Snapdragon digital cockpit and ADAS/AD products and a $179 million increase in revenues per unit driven by favorable mix and higher average selling prices
+ higher IoT revenues, primarily due to an increase in revenues per unit primarily driven by favorable mix
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- lower handsets revenues, primarily due to lower chipset shipments to certain major OEMs (primarily driven by customers adjusting build plans to reduce their inventory levels as a result of the negative effects of recent memory supply constraints and related price increases)
QCT EBT as a percentage of revenues decreased in the first six months of fiscal 2026 primarily due to:
- higher operating expenses, primarily driven by higher research and development and selling, general and administrative expenses
- lower gross margin, primarily driven by higher product cost, partially offset by higher average selling prices
QTL Segment (in millions, except percentages)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||
| March 29, 2026 | March 30, 2025 | Change | March 29, 2026 | March 30, 2025 | Change | |||||||||||||||||||||||||||||
| Licensing revenues | $ | 1,382 | $ | 1,319 | $ | 63 | $ | 2,974 | $ | 2,854 | $ | 120 | ||||||||||||||||||||||
| EBT | 994 | 929 | 65 | 2,224 | 2,086 | 138 | ||||||||||||||||||||||||||||
| EBT as a % of revenues | 72 | % | 70 | % | 2 points | 75 | % | 73 | % | 2 points | ||||||||||||||||||||||||
Second quarter 2026 vs. 2025
The increase in QTL licensing revenues in the second quarter of fiscal 2026 was primarily due to an increase in estimated revenues per unit, which was primarily driven by favorable mix.
QTL EBT as a percentage of revenues increased in the second quarter of fiscal 2026 primarily due to higher revenues.
First six months 2026 vs. 2025
The increase in QTL licensing revenues in the first six months of fiscal 2026 was primarily due to an increase in estimated sales of cellular products.
QTL EBT as a percentage of revenues increased in the first six months of fiscal 2026 primarily due to higher revenues.
QSI Segment (in millions)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||
| March 29, 2026 | March 30, 2025 | Change | March 29, 2026 | March 30, 2025 | Change | |||||||||||||||||||||||||||||
| Revenues | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-06-11 | Palkhiwala Akash J. | EVP, CFO & COO | Sell | -2,500 ×11 | $197.35 | -$493,380 |
| 2026-05-21 | Grech Patricia Y indirect | SVP, Chief Accounting Officer | Sell | -829 | $201.77 | -$167,267 |
| 2026-05-12 | Palkhiwala Akash J. | EVP, CFO & COO | Sell | -2,500 ×26 | $211.90 | -$529,741 |
| 2026-05-05 | AMON CRISTIANO R indirect | President & CEO | Sell | -10,000 | $185.00 | -$1,850,000 |
| 2026-05-04 | AMON CRISTIANO R indirect | President & CEO | Sell | -10,000 | $180.00 | -$1,800,000 |
| 2026-05-04 | ACE HEATHER S indirect | EVP, Chief HR Officer | Sell | -3,200 | $177.82 | -$569,024 |
| 2026-04-30 | Grech Patricia Y indirect | SVP, Chief Accounting Officer | Sell | -192 | $172.00 | -$33,024 |
| 2026-04-13 | Palkhiwala Akash J. | EVP, CFO & COO | Sell | -2,500 ×2 | $130.34 | -$325,854 |
| 2026-04-02 | Grech Patricia Y indirect | SVP, Chief Accounting Officer | Sell | -85 | $125.50 | -$10,668 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-07-29 10-Q expected by 2026-07-31 (in 44 days)
- ~2026-11-04 10-K expected by 2026-11-26 (in 142 days)
- ~2027-02-03 10-Q expected by 2027-02-05 (in 233 days)
- ~2027-04-28 10-Q expected by 2027-04-30 (in 317 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-04-29 10-Q Quarterly Report
- 2026-04-29 8-K Earnings Release; Financial Statements and Exhibits
- 2026-02-04 10-Q Quarterly Report
- 2026-02-04 8-K Earnings Release; Financial Statements and Exhibits
- 2026-01-16 8-K Officer/Director Change
- 2025-12-16 8-K Officer/Director Change
- 2025-11-05 10-K Annual Report
- 2025-11-05 8-K Earnings Release; Financial Statements and Exhibits
- 2025-09-02 8-K Officer/Director Change
- 2025-08-25 8-K Officer/Director Change
- 2025-07-30 10-Q Quarterly Report
- 2025-07-30 8-K Earnings Release; Financial Statements and Exhibits
- 2025-06-09 8-K Unregistered Equity Sale
- 2025-05-22 8-K Material Agreement Entered; Other Events; Financial Statements and Exhibits
- 2025-05-13 8-K Officer/Director Change