Key Stats for QCOM Stock
- Past week’s performance: -10.8%
- 52-week range: $122 to $260
- Valuation model target price: $223
- Implied upside: 46.9% over 2.2 years
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Guidance Miss Overshadows a Solid Quarter
Qualcomm (QCOM) fell roughly 11% over the past week after fiscal third-quarter results came in largely in line, but next quarter’s guidance disappointed investors. The company reported GAAP earnings per share of $1.87 on revenue near $9.95 billion, close to expectations, yet its outlook for the fiscal fourth quarter called for adjusted earnings of $2.05 to $2.25 per share. That range sits below the roughly $2.36 per share analysts had modeled, and it’s the guidance gap that triggered the selloff rather than the quarter itself.
Management pointed to two specific pressures behind the softer outlook. Higher memory and component costs are squeezing near-term margins, and Apple-related revenue is eroding faster than previously expected as Qualcomm’s largest handset customer continues shifting toward its own modem chips. Those two factors together explain most of why Wall Street reacted so negatively, even though headline revenue and profit weren’t far off consensus.
Qualcomm’s push beyond smartphones is the more encouraging counterweight. The company completed its acquisition of AI software firm Modular and won a major deal to supply BMW with cockpit and automated-driving compute chips through the next decade. At its June investor day, Qualcomm raised its 2029 non-handset revenue target to $40 billion, underscoring how central automotive and data center chips have become to its long-term strategy. On the earnings call, Qualcomm’s CEO said two near-term custom silicon wins will start generating revenue in the December quarter.
If Qualcomm’s non-handset businesses keep scaling as management expects, the current guidance stumble may prove temporary rather than structural. The bigger question for investors is whether Apple-related declines stabilize before new revenue streams fully offset them.
Is QCOM Stock Undervalued?
Under valuation model assumptions realized through 9/30/28, the stock is modeled using:
- Revenue Growth (CAGR): 5.1%
- Operating Margins: 30.7%
- Exit P/E Multiple: 15.1x
Based on these inputs, the model estimates a target price of $223, implying 46.9% total upside from the current share price and a 19.4% annualized return over the next 2.2 years.
A 19.4% projected annual return puts Qualcomm well above the 15% threshold that typically signals an undervalued or long-term growth stock. That’s notable given the company’s revenue growth assumption is modest at just over 5%, meaning most of the projected return comes from margin strength and a modest multiple expansion rather than explosive top-line growth. Qualcomm’s operating margin near 31% is already high for a semiconductor company, and the model assumes it holds roughly steady even as the business mix shifts toward automotive and data center chips.
Qualcomm’s current NTM P/E sits near 16x, cheap relative to many AI-linked chipmakers. Broadcom, which has built a similar custom silicon and networking business, trades at a considerably higher forward multiple, reflecting the market’s willingness to pay up for diversified AI exposure. MediaTek, Qualcomm’s closest handset chip rival, has posted slower revenue growth recently and trades at a lower valuation, underscoring how much investors already reward Qualcomm’s diversification efforts relative to a pure handset peer.
The stock’s cheapness relative to Broadcom suggests the market hasn’t yet given Qualcomm full credit for its automotive and data center pivot. If the BMW deal and other custom silicon wins scale as guided, that gap could narrow.
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Qualcomm vs. Broadcom and MediaTek
Broadcom (AVGO) is the most direct comparison for where Qualcomm wants to go. Both now sell custom AI and networking silicon alongside legacy businesses. Broadcom’s revenue growth has run in the high teens to twenties recently, well ahead of Qualcomm’s 5.1% forecast CAGR. It trades at a forward P/E roughly double Qualcomm’s. That gap reflects how much further along Broadcom is in monetizing custom silicon versus Qualcomm’s still-emerging automotive and data center wins.
MediaTek, by contrast, remains more concentrated in smartphone chips and has posted slower revenue growth than Qualcomm over the past year. Its lower valuation multiple reflects that narrower growth profile. Qualcomm sits in between, still generating most of its profit from handsets today but increasingly valued on diversification. The BMW automotive win and the Modular acquisition are early steps toward closing the gap with Broadcom. However, Qualcomm still trades at a meaningful discount, reflecting execution risk.
See how the expanded Snapdragon Digital Chassis deal widens Qualcomm’s auto pipeline >>>
What’s Driving QCOM Stock Going Forward?
The most immediate catalyst is whether Qualcomm’s two new custom silicon programs begin generating revenue in the December quarter, as management indicated. If that revenue arrives on schedule, it would validate the non-handset growth story central to the bull case since the June investor day. Any delay, however, could reinforce concerns that the diversification pitch is running ahead of actual results.
Apple’s continued shift away from Qualcomm modems remains the biggest headwind to watch. Since Apple has been Qualcomm’s largest customer for years, every incremental decline in that relationship pressures near-term revenue even as automotive and data center wins ramp up. Investors will likely track quarterly updates on Apple-related revenue closely through the rest of fiscal 2026.
Longer term, Qualcomm’s BMW partnership and its raised $40 billion non-handset revenue target for 2029 give the stock a multi-year growth runway beyond smartphones. Industry-wide demand for AI compute and connected vehicle technology supports that thesis. However, it will take several years of execution before non-handset revenue meaningfully offsets the Apple decline. If Qualcomm hits its own targets, the stock’s current discount to peers like Broadcom could close over time.
See how Qualcomm’s automotive and AI pivot could reshape its valuation (Free with TIKR) >>>
Should You Invest in QUALCOMM Incorporated?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
