Chipmakers Qualcomm Inc. and Arm Holdings Plc both delivered strong numbers today as their latest earnings results beat Wall Street’s expectations, but their stocks were heading in opposite directions in the wake of today’s reports.

In the case of Qualcomm, it must be wondering what it did wrong, for it posted some impressive results that surpassed expectations across the board, only to see its stock dip after-hours. The company reported fourth-quarter earnings before certain costs such as stock compensation of $3 per share, breezing past the $2.88 analyst consensus estimate. Revenue for the period came to $11.27 billion, up 10% from a year earlier and above the $10.79 billion analyst target.

However, Qualcomm recorded an overall net loss for the quarter of $3.12 billion, primarily from a onetime income tax expense. In the same period one year ago, it recorded a profit of $2.92 billion.

For the first quarter of its fiscal 2026 year, Qualcomm said it’s looking for sales of between $11.8 billion and $12.6 billion, or $12.2 billion at the midpoint of its guidance range. That’s much better than Wall Street’s forecast of $11.62 billion. The company is also looking for earnings of between $3.30 and $3.50 per share, ahead of the Street’s target of $3.31.

Qualcomm President and Chief Executive Cristiano Amon (pictured) said the company’s impressive revenue beat shows that its business “remains strong” and is showing good momentum. “We delivered 18% year-over-year growth in total QCT non-Apple revenues, with combined Automotive and IoT revenue growth of 27%,” he said.

Qualcomm has long dominated the smartphone chip industry, and manufactures the central processing units that sit at the heart of almost every Android handset in the world, as well as the modems that power Apple Inc.’s iPhones and Samsung Electronics Co. Ltd.’s flagship Galaxy devices, among others.

The company is bracing itself to lose Apple as a customer of its modems in the coming years, as the iPhone maker has voiced ambitions to design and develop its own, and in response the chipmaker has been trying to diversify its business away from the smartphone industry. Now, it’s focused on making chips for devices ranging from Windows computers to virtual reality headsets and smart glasses such as Meta Platforms Inc.’s Meta Ray-Ban Display.

Investors are most excited about Qualcomm’s push into the artificial intelligence industry, though. It’s an extremely lucrative market that has been utterly dominated by Nvidia Corp. until now, with Advanced Micro Devices Inc. trying to play catch up. But such is the demand for AI processors, that most analysts believe there’s an opportunity for anyone who can make a compelling alternative to those companies’ graphics processing units.

Qualcomm finally revealed its hand in the AI market last week when it unveiled its AI200 and AI250 accelerators, which are server chips focused specifically on inference workloads, or running AI models in production, as opposed to training. The company said the new chips are expected to launch in 2026 and 2027, respectively, and will come in a complete liquid-cooled server rack system, similar to how Nvidia’s and AMD’s GPUs can be bought in full-rack systems with up to 72 chips. That’s important, because many of the most powerful AI models require the combined computing power of numerous chips.

Despite Qualcomm’s impressive traction, the stock fell more than 2% in extended trading, eroding part of the gains made earlier during the regular trading session, when it rose 4%. The stock is now up 17% in the year to date, trailing Nvidia and AMD, whose stocks have risen 45% and 112% respectively, this year.

Qualcomm said all three of its major device categories came in ahead of the Street’s expectations. For instance, revenue from its handsets business rose 14%, to $6.98 billion, while automotive sales increased 17%, to $1.05 billion, and the Internet of Things unit posted a 7% increase, with revenue rising to $1.81 billion. The IoT units accounts for chips that power VR headsets and Meta’s smart glasses, as well as sensors and other wearable devices. Those divisions make up Qualcomm’s QCT business group, which delivered $9.82 billion in sales overall, up 13% from a year earlier.

As for Qualcomm’s profitable QTL licensing business, revenue there declined 7% from a year earlier, to $1.41 billion, but still surpassed the Street’s expectations.

Arm delivers solid beat and guidance

Chip designer Arm was able to match Qualcomm’s impressive results, delivering earnings before certain costs such as stock compensation of 39 cents per share on revenue of $1.135 billion, surpassing the Street’s expectations of a 33-cent-per-share profit and $1.06 billion in sales.

Arm reported a net income of $238 million during the second quarter of its fiscal 2026 year, up from a profit of just $107.5 million in the year-ago period.

Unlike Qualcomm, Arm doesn’t develop semiconductors by itself. Rather, it licenses designs of the underlying chip architecture to companies such as Apple, Nvidia and, indeed, Qualcomm itself. The company has made a name for itself by designing the instruction sets for computer chips that power the vast majority of the world’s smartphones, as well as tablets and wearable devices. In recent years, its chip designs have also started appearing in data center servers and in PCs, powering AI workloads.

Its most advanced technology is Armv9, which serves as the blueprint of most smartphone processors in the world today. Armv9 generates significantly higher royalty rates than its predecessor, Armv8. In recent months, Arm has hinted at plans to go beyond designing chips and potentially start manufacturing processors itself, or more likely, designing the full processors and having them made by a third-party contract manufacturer, similar to how most of its customers operate.

The company has not yet finalized such plans, but its Chief Executive Rene Haas said today that it sits firmly at the center of an AI revolution that’s transforming industries across the world. “As AI workloads scale across cloud AI, physical AI and edge AI, the demand for high-performance and energy-efficient compute continues to accelerate,” he said. “Arm is the only compute platform to deliver AI everywhere, from milliwatts in the smallest edge devices to megawatts in the world’s largest data centers.”

For the current quarter, Arm offered a promising forecast, saying it sees revenue of about $1.225 billion at the midpoint of its guidance range. Wall Street is looking for just $1.11 billion in third-quarter sales.

Arms’s stock gained more than 3% on the report, and is now up just over 30% in the year to date.

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