QCOM: Premium Android Demand And AI Expansion Will Drive Future Gains Despite Risks

QUALCOMM's analyst price target has increased modestly from $187.71 to $191.80, as analysts cite stronger than expected premium Android performance, resilient profit margins, and optimism surrounding the company's AI initiatives and diversified growth outlook.

Analyst Commentary

Recent analyst notes on QUALCOMM provide a nuanced outlook, highlighting both encouraging developments and lingering uncertainties for the company’s growth and valuation prospects.

Bullish Takeaways

Bullish analysts are raising price targets following stronger than expected results, particularly in premium Android devices, which signal resilient demand and effective execution on recent product launches.
Broader diversification efforts are underway, with strength evident across Qualcomm’s handset, automotive, and IoT divisions. This supports ongoing top-line growth and a positive long-term growth outlook.
Momentum in artificial intelligence is drawing increased market attention, with new datacenter AI product lines and large-scale deployments such as the multi-billion dollar partnership in Saudi Arabia being viewed as transformative opportunities for future revenue.
Upward estimate revisions reflect confidence in profit margins and the ability to leverage advanced technologies. This positions Qualcomm as a credible player in the evolving AI ecosystem.

Bearish Takeaways

Bearish analysts are cautious about the sustainability of recent gains. Qualcomm’s AI datacenter business, while promising, currently represents a modest portion of overall sales and faces intense competition from major industry rivals.
Concerns linger around the overall semiconductor growth outlook, with uncertainty tied to the possibility of a broader AI investment bubble that could weigh on industry-wide valuations and demand cycles.
Certain price target reductions cite execution risks associated with diversification and the integration of new revenue streams, as Qualcomm moves further into data center and automotive segments.

What's in the News

South Korean antitrust officials conducted unannounced inspections of Arm's Seoul offices after Qualcomm filed a complaint alleging Arm's licensing practices harm competition (Bloomberg).
Two major news sources report the Trump administration may delay imposing new semiconductor tariffs, which affects U.S.-based companies such as Qualcomm (Reuters, Wall Street Journal).
Apple is reportedly planning to transition away from Qualcomm's cellular modems for its iPhone 18 Pro models, opting for Apple-designed components instead (Bloomberg).
America's chip export restrictions are reportedly leading to advanced semiconductor shortages in China, with implications for companies like Qualcomm (Wall Street Journal).
China is suspending export controls on five key minerals used in semiconductor manufacturing for one year, potentially easing supply constraints in the industry (New York Times).

Valuation Changes

Consensus analyst price target has risen slightly, increasing from $187.71 to $191.80.
Discount rate has fallen marginally, moving from 10.87% to 10.83%.
Revenue growth forecasts have edged higher, from 2.86% to 2.97%.
Net profit margin is up modestly, from 25.16% to 25.54%.
Future P/E ratio has increased slightly, from 20.23x to 20.59x.

Diversification into AI devices, automotive, and industrial IoT is set to drive higher margins and reduce dependence on individual customers.
Strategic expansion in data centers and next-gen connectivity broadens Qualcomm's addressable market and supports long-term sustainable growth.
Rising competition, geopolitical risks, unproven diversification, regulatory pressures, and reliance on volatile smartphone markets threaten QUALCOMM's revenue, margins, and long-term earnings stability.

Catalysts

About QUALCOMM

Engages in the development and commercialization of foundational technologies for the wireless industry worldwide.What are the underlying business or industry changes driving this perspective?

Expanding adoption of AI-powered devices-including smartphones, XR wearables, smart glasses, and emerging personal AI products-should fuel higher average selling prices, increased unit demand, and ongoing upgrade cycles, positively impacting Qualcomm's future revenue and supporting gross margin expansion.
Rapid growth in automotive and industrial IoT segments, supported by strong design win momentum and a robust multi-year pipeline (with a combined $22 billion revenue target by 2029), is set to diversify Qualcomm's revenue base and drive margin-accretive growth as these businesses become a larger share of total earnings.
Successful execution of multi-year agreements with global OEMs (e.g., expanded Xiaomi partnership, strong Samsung baseline share), along with deepening relationships in key international markets, increases revenue visibility and reduces customer concentration risk, supporting steadier long-term top-line growth.
Strategic entry into the data center accelerated by the Alphawave acquisition positions Qualcomm to capture new high-growth markets as AI inference and edge workloads scale, with potential material revenue contribution starting FY28; this catalyst can drive both revenue and high-margin licensing streams.
Proliferation of 5G, Wi-Fi 7, and next-gen connectivity across devices and industries continues to grow device complexity and connectivity requirements, bolstering Qualcomm's addressable market and providing a structural tailwind to revenue-per-device and ecosystem-wide earnings.

QUALCOMM Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming QUALCOMM's revenue will grow by 2.7% annually over the next 3 years.
Analysts assume that profit margins will shrink from 26.8% today to 26.1% in 3 years time.
Analysts expect earnings to reach $12.2 billion (and earnings per share of $11.24) by about September 2028, up from $11.6 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $10.4 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 19.2x on those 2028 earnings, up from 14.7x today. This future PE is lower than the current PE for the US Semiconductor industry at 33.5x.
Analysts expect the number of shares outstanding to decline by 2.88% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 10.33%, as per the Simply Wall St company report.

QUALCOMM Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Escalating competition from major OEMs such as Apple and Samsung developing in-house chips, as well as local players in China, threatens QUALCOMM's mobile chipset market share, risking lower revenues and margin compression.
Ongoing global trade volatility and geopolitical tensions, especially U.S.-China dynamics and tech sovereignty initiatives, may disrupt supply chains and shrink QUALCOMM's addressable market in key international regions, negatively impacting long-term revenue growth.
The company's ambitious diversification initiatives into data centers and AI acceleration are in early, unproven phases and depend heavily on successful customer engagements and large design wins; delays, integration challenges (including Alphawave acquisition), or failure to capture significant share could result in higher R&D expenses without corresponding revenue growth, hurting net earnings and margins.
Heavy legal and regulatory scrutiny remains a persistent risk, especially regarding QUALCOMM's patent licensing business model, which could result in lower royalty revenues and a structurally lower operating margin if adverse rulings or settlements occur.
The reduction of Apple-related revenues and QUALCOMM's continued reliance on cyclical segments like smartphones expose the company to secular stagnation in handset sales, increasing volatility and threatening the sustainability of both revenue and net income over the long term.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $177.715 for QUALCOMM based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $225.0, and the most bearish reporting a price target of just $140.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $46.9 billion, earnings will come to $12.2 billion, and it would be trading on a PE ratio of 19.2x, assuming you use a discount rate of 10.3%.
Given the current share price of $158.66, the analyst price target of $177.71 is 10.7% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.