Analysts reset Qualcomm stock price target, send warning

Analysts provided their opinion on this business in transition.

Jun 18, 2025 - 22:52

Analysts reset Qualcomm stock price target, send warning

Keeping a business afloat is hard. According to the U.S. Bureau of Labor Statistics, 50% of small private businesses typically fail within five years. This five-year span seems like the breaking point.

If your company is still in business after five years, it means you've likely overcome many setbacks and made many tough decisions.

There's plenty that can derail even the best businesses. Suppliers may go bankrupt, fail to meet deadlines, or produce shoddy items. Marketing plans may go awry. Workers may defect to rivals. Even your best customers may eventually sour on your solutions, forcing you to pivot your business entirely.

One company that seems to have been quite unlucky in choosing its business partners is Qualcomm. Apple is one of its biggest customers, and it is slowly but steadily ditching Qualcomm's modems in favor of its own, creating a crisis for the technology company and forcing it to rethink its business.

Qualcomm plans to enter the data center market

Qualcomm was founded in 1985, and for a business to be turning 40 is an incredible achievement.

The company has two different branches of business. One is Qualcomm CDMA Technologies (QCT) and the other is Qualcomm Technology Licensing (QTL). QCT revenue streams are handsets, automotive, and Internet of Things, while QTL controls the patent licensing business.

According to Bloomberg and the Bank of America Global Research estimates, Apple's contribution to QCT's handset division was 15% in 2024.

On June 9th, Qualcomm (QCOM) announced that it plans to acquire Alphawave Semi, a producer of high-speed wired connectivity, chiplets, and custom silicon.

Artificial intelligence training and inference require highly parallel, memory and bandwidth-intensive computations. Accelerators are built on GPUs or custom chiplets, and need better, more efficient interconnections and AlphaWave's technology enables that.

“Alphawave Semi has developed leading high-speed wired connectivity and compute technologies that are complementary to our power-efficient CPU and NPU cores,” said Cristiano Amon, president and CEO of Qualcomm Incorporated.

Qualcomm's pivot to the data center markets may prove a good plan to recoup the lost revenue due to Apple's increasing reliance on its own modems. This acquisition of Alphawave Semi is expected to be completed during the first calendar quarter of 2026 and isn't final.

More Tech Stocks:

According to Gartner, semiconductor revenue in data centers almost doubled in 2024 to reach $112 billion, and the firm expects global semiconductor revenue to total $705 billion in 2025.

Bank of America analysts lower Qualcomm stock price target

Qualcomm revenue in Q2 of fiscal year 2025 reached $10.9 billion, a 17% increase year-over-year. Majority of the revenue came from QCT part of the company, which had revenue of $9.5 billion. Handset division revenue was $6.9 billion, automotive revenue $959 million and $1.6 billion came from IoT.

Bank of America analyst Tal Liani and his team recently updated their opinion on Qualcomm shares.

Analysts noted that the Internet of Things and automotive have significant growth potential and were up 27% and 59% year over year in the most recent quarter. However, they warned that smartphones, representing 73% of Qualcomm CDMA revenues, have peaked.

They forecast that Apple's contribution will drop from 15% in 2024 to 6% of total handset revenues by fiscal year 2027 and drop to zero beyond 2027.

The analysts believe there are only limited near-term catalysts for the stock and lowered their estimates and price objectives to reflect their updated growth outlook. They set a Qualcomm stock price target of $200, down from $245, equal to 15 times their calendar 2026 earnings estimates. Previously, their target price-to-earnings (P/E) ratio was 17.

Qualcomm's forward P/E ratio is currently 13.

While they reduced their target, they still think the upside is enough to justify maintaining their buy rating on the stock.

However, they did highlight three risks that could limit Qualcomm's stock in the near term:

The handset market is mature and without any visible growth catalyst.
They expect recent smartphone growth to reverse, as the impact of product launches and channel fill in China erodes, and share gains at Samsung will subside.
Apple will start using its own modem for non-Pro phones.

Analysts concluded that "AI PC and data center connectivity could contribute to growth but may take time [to] carry enough weight to offset the smartphone trends."