Qualcomm short interest hits decade high as AI pivot faces scrutiny
The chipmaker’s second-quarter fiscal 2026 results showed revenue decline but beat earnings expectations, while CEO Cristiano Amon outlined plans for data centre processor shipments to hyperscalers by late 2026.
Wall Street short sellers have significantly increased their bets against Qualcomm, with short interest reaching nearly $11.8 billion, marking the highest level in at least a decade. This bearish sentiment persists despite a recent rally in Qualcomm’s share price, which swung from a low of $122 to a high of $247.90, driven by easing U.S.-China tariff tensions and analyst upgrades.
Qualcomm’s financial performance for the second quarter of fiscal 2026 presents a mixed picture: revenue declined by 2% year-on-year to $10.6 billion, while non-GAAP earnings per share (EPS) of $2.65 beat market expectations, although this represented a 7% annual decline. The company faces headwinds from weak global smartphone demand and constraints in memory supply, which have impacted handset OEM production.
Conversely, Qualcomm is pursuing a strategic pivot towards artificial intelligence and automotive markets. The company reported record automotive sales, surpassing a milestone of more than $5 billion in annualised automotive revenue, with projections to exceed a $6 billion run rate by the end of fiscal 2026. Additionally, CEO Cristiano Amon announced that new data centre processors are scheduled to ship to a major hyperscaler customer before the end of calendar 2026.
Analysts caution that Qualcomm must demonstrate tangible execution in its AI strategy to counter the prevailing bearish sentiment. According to S3 Partners’ Ihor Dusaniwsky, short sellers are not capitulating yet, with many believing the recent pullback could be the beginning of a deeper reset after years of AI-fuelled momentum.
The stock’s valuation has stretched, trading around 5.30 times forward sales, above its sector average and historical median. Despite the near-term softness, Qualcomm generated robust cash flows, with operating cash flow reaching $7.4 billion in the first half of fiscal 2026, reinforcing balance sheet resilience as it attempts to diversify beyond its traditional handset business.
