BofA cuts Qualcomm target on near-term smartphone chip sales risks
The brokerage said the handset market, which accounts for nearly three-quarters of Qualcomm's chip revenue, has peaked and faces limited near-term catalysts. Weaker demand from China, moderating gains at Samsung (KS:005930), and Apple's planned switch to in-house modems for more iPhones are all likely to weigh on growth, it said.
While Qualcomm's Internet of Things and automotive segments grew 27% and 59% year-over-year in the most recent quarter, BofA noted that some of that momentum may reflect easy comparisons. It expects smartphone-related revenue to decline sequentially in the coming quarters.
Still, the note pointed to longer-term opportunities in AI PCs, connected vehicles and data center infrastructure. Qualcomm's recent acquisition of Alphawave gives it a foothold in high-speed interconnects critical to artificial intelligence workloads.
BofA projects that automotive, IoT, and other non-smartphone categories could contribute 40% of Qualcomm's chip business by 2030, up from 27% currently. However, it cautioned that management's growth targets, particularly in IoT, may be overly optimistic.
The brokerage lowered its earnings and revenue forecasts and now values Qualcomm at 15 times projected 2026 earnings, down from 17 times previously. The shares currently trade at about 12 times forward earnings, below the stock's historical average of 15–18 times, which BofA said could offer long-term investors an entry point.
Though BofA said Qualcomm's strategic pivot toward faster-growing markets supports its long-term investment case.
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