Qualcomm shares dropped 10% in after-hours trading on February 5 after the company warned that surging AI infrastructure demand is creating memory chip shortages that will constrain smartphone production.
The company beat Q1 fiscal 2026 estimates with revenue of $11.27B and EPS of $2.78. The problem is forward guidance: Q2 revenue of $10.2B-$11B falls short of analyst expectations around $11.1B, with adjusted EPS of $2.45-$2.65 versus consensus of $2.87.
CEO Cristiano Amon was direct on the earnings call: "I think the market is going to be sized by that. Our customers are adjusting their build production to the memory they have available."
The constraint is DRAM supply. AI data centers require high-bandwidth memory (HBM) for GPUs, and that demand is pulling memory production capacity away from standard DRAM used in smartphones, laptops, and other consumer devices. Chinese OEMs are particularly affected, cutting inventory as memory availability drops.
This isn't theoretical impact anymore. Arm shares also fell post-earnings on smartphone memory concerns. Apple warned about similar constraints in January. The pattern is clear: AI infrastructure buildout is creating downstream supply chain pressure on enterprise and consumer hardware.
For enterprise tech leaders, three things to watch: First, whether memory prices spike enough to affect device procurement costs. Second, how this impacts Windows on ARM adoption (Snapdragon X Elite laptops rely on the same supply chains). Third, whether the shortage extends development timelines for ARM-based enterprise hardware projects.
Qualcomm maintains a strong balance sheet with $7.21B cash and a 2.82 current ratio. Analysts still rate it a buy with price targets around $187, viewing the dip as temporary. But the CEO couldn't say when memory supply will normalize. History suggests the market adjusts to memory constraints, eventually. The question is how long "eventually" takes.