AI Wants “Every Scrap of RAM.” Qualcomm and Arm Just Showed Who Pays the Bill

Key Takeaways

• Arm fell 13% and Qualcomm 9.5% on Thursday as pricier memory hit their phone businesses.

• Memory makers like Micron win from the AI-driven shortage, and phone-chip designers pick up the bill.

• Qualcomm's gross margin fell to 50.8% from 55.3% a year earlier, and its price increases won't fully pay off until the second half of fiscal 2027.

• Arm has data center growth to lean on. Qualcomm's next margin is the test.

Chip stocks sold off on Nov. 5, and the two phone-chip names in the middle had the same problem: memory.

Qualcomm( QCOM:NASDAQ ) fell 9.5% after guiding December-quarter earnings below what analysts expected, as rising chip and memory costs outran its own price increases. Arm Holdings( ARM:NASDAQ ) dropped 13% after saying memory pricing in smartphones weighed on its royalties. Both bounced on Friday.

Micron Technology( MU:NASDAQ ) fell 17% in the same selloff. But Micron is the one selling the memory.

On Thursday's Decoder , The Verge editor-in-chief Nilay Patel listed the shocks the supply chain has absorbed, from COVID to tariffs, then said:

"It feels like the only thing the system isn't resilient to is the AI industry wanting every scrap of RAM that the whole world can produce."

PCs are hit too: Intel expects industry PC shipments to fall about 12% this year. Qualcomm and Arm have warned on phones since February.

Qualcomm Pays Twice

Pricier memory means fewer, pricier phones, and Qualcomm's own inputs cost more too.

Its handset revenue fell 26% to $5.14 billion in the September quarter. Automotive jumped 89% to a record $1.99 billion, but cars and IoT together added only about $1 billion against $1.8 billion lost in handsets.

For the December quarter, Qualcomm guided non-GAAP EPS to $2.15 to $2.35. Even the top of that range is 33% below the $3.50 it earned a year earlier.

TIKR Tracks 37 Analysts on Qualcomm. How Many Say "Buy"?

See the full breakdown of Buy, Hold, and Sell ratings on Qualcomm, along with Wall Street's revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Qualcomm's Analyst Ratings

Analysts had earnings dipping in fiscal 2027, then climbing past fiscal 2025's $12.03 a share in fiscal 2028:

Lasting memory pressure would put that at risk. After this guide, I'd expect fiscal 2027 to come down.

Qualcomm's Price Increases Come Late

Qualcomm said input costs are rising from wafer fabrication to memory, and its price increases won't fully reach its chip unit's gross margin until the second half of fiscal 2027.