Key Stats for QCOM Stock
- Past week’s performance: -11%
- 52-week range: $122 to $260
- Valuation model target price: $223
- Implied upside: 38.8% over 2.1 years
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Memory Costs and Apple’s Exit Cloud the Outlook
Qualcomm (QCOM) shares tumbled after the company posted a soft profit forecast for its fiscal fourth quarter. Management flagged rising memory costs and a faster-than-expected decline in Apple-related revenue. Investors reacted quickly, and the stock fell sharply in the days following the report. Even so, shares clawed back some of that loss by the end of the week.
The core issue is Qualcomm’s chip business, known as QCT, which supplies processors for smartphones. Handset revenue fell roughly 20% year over year as memory shortages pushed component costs higher. Apple has been steadily building its own modem chips, so its purchases from Qualcomm keep shrinking. That trend is now accelerating faster than Wall Street expected.
But the story is not one-dimensional. Automotive revenue hit a record, climbing 61% as carmakers adopt Qualcomm’s Snapdragon Digital Chassis platform. Internet of Things revenue also grew, and non-handset sales overall rose 28%. These newer businesses are becoming meaningful, but they are not yet large enough to offset smartphone weakness.
If Qualcomm’s diversification keeps scaling, the guidance miss may prove temporary rather than structural. CEO Cristiano Amon told investors on the earnings call that two near-term custom silicon wins would begin generating revenue in the December quarter, a signal that new growth engines are close to contributing meaningfully.
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Is Qualcomm Stock Undervalued After the Pullback?
Under valuation model assumptions realized through 9/30/28, the stock is modeled using:
- Revenue Growth (CAGR): 5.2%
- Operating Margins: 30.6%
- Exit P/E Multiple: 15.1x
Based on these inputs, the model estimates a target price of $223, implying a 38.8% total return and a 16.5% annualized return over the next 2.1 years.
Qualcomm now trades at a forward earnings multiple well below its own five-year average, so the pullback has made the stock statistically cheap. Growth assumptions here are modest on purpose, since the model bakes in continued handset softness rather than a rebound. Margin expansion depends on the mix shifting toward higher-margin automotive and IoT chips as handset revenue keeps shrinking.
Product diversification is the swing factor for this thesis. Snapdragon-based auto platforms, edge AI chips, and the pending Modular acquisition all point toward Qualcomm becoming less dependent on smartphones over time. That shift, if it plays out, could support a higher multiple than the stock carries today.
Compared with its own trading history, the current valuation looks conservative rather than optimistic. The bigger question is whether the smartphone business stabilizes or keeps eroding as Apple exits.
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How Qualcomm Stacks Up Against Broadcom and MediaTek
Qualcomm faces two very different types of competition. Broadcom (AVGO) competes for AI infrastructure and custom silicon dollars, while MediaTek (2454) competes directly in smartphone chips at a lower price point. Both comparisons matter for how investors should think about Qualcomm’s valuation today.
Broadcom trades at a much richer forward P/E, closer to the low 30s, reflecting its exposure to AI networking and custom accelerator chips. Its revenue growth has been running above 20% recently, well ahead of Qualcomm’s low single-digit pace. That gap explains why Broadcom commands a premium multiple while Qualcomm does not.
MediaTek sits closer to Qualcomm on valuation, trading around the mid-teens on forward earnings, but its revenue growth has been slower, in the high single digits. Qualcomm’s operating margins, above 30%, also compare favorably against MediaTek’s mid-teens margins, largely because of Qualcomm’s stronger position in premium smartphone chips and licensing revenue.
The moat Qualcomm holds is technology licensing, since it collects fees on nearly every 5G device sold regardless of who makes the chip. That business is sticky and high margin, and it gives Qualcomm cash flow that MediatTek and most smartphone chipmakers cannot match.
Map out the path to a re-rating as non-handset revenue growth accelerates in fiscal 2027 >>>
What’s Driving QCOM Stock Going Forward?
The Modular acquisition is the clearest new growth catalyst on the table. Qualcomm closed the roughly $3.9 billion all-stock deal and issued about 17.8 million new shares to fund it. The purchase strengthens Qualcomm’s AI software platform and pushes the company further into data center infrastructure, a market it has barely touched until now.
Custom silicon wins are the next catalyst to watch. Management has said two of these deals should start generating revenue in the December quarter, which would be the first real proof point for Qualcomm’s non-handset ambitions. If that revenue materializes on schedule, it could ease concerns about the Apple-related decline.
Automotive remains a steady grower regardless of what happens with smartphones. Partnerships with Stellantis and other automakers around the Snapdragon Digital Chassis platform continue to expand, and that segment just posted record revenue.
If these newer businesses keep scaling, Qualcomm’s earnings mix could look very different within a few years. Going forward, investors will be watching whether non-handset revenue can grow fast enough to offset continued Apple-related declines.
See how Qualcomm’s automotive and AI bets could reshape its long-term earnings power >>>
Should You Invest in QUALCOMM?
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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!
