QCOM Gains Traction in Automotive: Will It Deliver Sustainable Growth?
Since the acquisition of Veneer, Inc., the company has steadily gained a strong foothold in the emerging market of driver-assistance technology. The Arriver business of Veoneer operates the dedicated software unit focused on sensor perception and drive policy, including a full stack of features and functions. With this buyout, Qualcomm has integrated Arriver's Computer Vision, Drive Policy and Driver Assistance assets into its ADAS (Advanced Driver Assistance System) portfolio. It has allowed QCOM to deliver an open and competitive platform for automakers to better compete with rivals within the self-driving vehicle market. The company recently acquired Autotalks, an industry leader in direct vehicle-to-everything communication technology. Integration of Autotalks' robust portfolio of automotive-qualified global V2X solutions will facilitate the development of leading-edge, reliable solutions to enhance road safety and optimize traffic efficiency.
Growing demand for the company's Snapdragon Digital Chassis product portfolio, which includes telematics and connectivity platforms, digital cockpit and C-V2X solutions, is expected to drive growth in automotive in the near term. In the second quarter, Qualcomm secured 30 new designs, including five ADAS programs and designs from Chinese automakers such as Nio, Zeekr, Great Wall, Dongfeng and more. Per our estimate, the company is expected to generate $3.7 billion in revenues from the automotive segment, indicating 27.3% year-over-year growth.
How Are Competitors Faring?
In the automotive segment, the company faces competition from the NVIDIA Corporation NVDA and Intel Corporation INTC.
NVIDIA DRIVE solutions include a comprehensive stack of hardware and software tools designed to support autonomous vehicles. It is also swiftly working on V2X technology, specifically in AI-driven connectivity for autonomous vehicles. With a vast client base that includes Mercedes-Benz, Li Auto, General Motors, Toyota and several other prominent automakers, NVIDIA has gained solid market traction in the AI-driven autonomous driving space.
Intel's Mobileye has rapidly expanded in the autonomous car technology market. Mobileye's technologies related to cameras, in-car networking, sensor chips, roadway mapping, cloud software, machine learning and data management are gaining popularity among automakers. More than 70 million vehicles from BMW, Volkswagen, Ford and Nissan use Intel's Mobileye for driver assistance. However, with the integration of advanced V2X and a broader portfolio of digital cockpit, infotainment and connectivity, Qualcomm is expected to maintain its competitive edge in the automotive vertical.
QCOM's Price Performance, Valuation and Estimates
QCOM shares have declined 25.5% over the past year against the industry 's growth of 18.1%.
Image Source: Zacks Investment Research
Going by the price/earnings ratio, the company's shares currently trade at 12.87 forward earnings, lower than 30.31 for the industry and the stock's mean of 17.79. It carries a Value Score of A.
Image Source: Zacks Investment Research
Earnings estimates for 2025 have decreased 0.17% to $11.8 per share over the past 60 days, while the same for 2026 have decreased 3.18% to $12.19.
Qualcomm stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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