Key Takeaways
- Bank of America resumed coverage of Qualcomm with an Underperform rating and set a $145 price target
- The chipmaker faces a $7–8 billion revenue hit as Apple transitions to proprietary modem technology
- Samsung plans to reduce Qualcomm content in Galaxy phones from 100% to approximately 75% by fall 2026
- Xiaomi’s $7 billion chip development investment signals another major customer looking to reduce dependency
- Bank of America forecasts merely 2% yearly revenue growth for Qualcomm through fiscal year 2028
Shares of Qualcomm tumbled 3.1% to $133.81 during Tuesday’s premarket session following Bank of America’s reinstatement of coverage with an Underperform designation. The chip manufacturer’s stock has now declined 19% since the beginning of the year.
Bank of America established a $145 price objective, suggesting modest upside of roughly 5% from Monday’s closing price. Analyst Vivek Arya pointed to sluggish expansion prospects and intensifying competition throughout Qualcomm’s primary business segments.
The most significant threat comes from Apple. The iPhone maker is expected to completely eliminate Qualcomm modems from its devices by fall 2027, replacing them with internally developed alternatives. Bank of America calculates this will cost Qualcomm approximately $7–8 billion in annual revenue.
Apple, Samsung, and Xiaomi collectively accounted for roughly 54% of Qualcomm’s fiscal 2025 revenue. This heavy customer concentration explains why the chipmaker faces such a precarious situation.
Samsung represents another concerning trend. The Korean electronics giant will reduce Qualcomm’s presence in its fall 2026 Galaxy smartphone series from complete integration to approximately 75%, per Bank of America’s analysis. This marks yet another significant revenue stream under threat.
Meanwhile, Xiaomi has pledged $7 billion toward proprietary semiconductor development — an unmistakable indication that the Chinese manufacturer intends to decrease its dependence on external chip suppliers.
“QCOM’s core equity risk is increasingly defined by their three top customers and their willingness to internalize key silicon over time,” Arya wrote.
Will New Markets Offset Mobile Losses?
Qualcomm has aggressively pursued expansion into automotive and Internet of Things sectors to counterbalance smartphone market challenges. Bank of America anticipates auto and IoT chip sales will expand at approximately 19% annually, climbing to roughly $17.7 billion by fiscal 2028.
The company is also targeting AI infrastructure opportunities. However, even capturing 10–20% of the ARM-based server processor market would generate only $1–2 billion in revenue and add $0.20–$0.40 to earnings per share, according to BofA estimates. That modest contribution hardly compensates for a $7–8 billion revenue gap.
CEO Cristiano Amon expressed measured optimism last month. “While our near-term handsets outlook is impacted by industry-wide memory supply constraints, we are encouraged by end-consumer demand for premium and high tier smartphones,” he said.
Escalating memory component costs are creating additional pressure throughout the smartphone industry. While this could dampen sales of budget devices, Qualcomm’s focus on premium segments provides some insulation.
Analyst’s Growth Projections Paint Bleak Picture
Bank of America anticipates Qualcomm’s revenue will expand at merely 2% per year through fiscal 2028. By comparison, the broader semiconductor industry is projected to achieve approximately 17% growth during the identical timeframe.
The investment bank noted that expansion into faster-growing market segments is “largely offset by the potential loss of ~$7bn in Apple modem revenue and competitive share losses at Samsung.”
Qualcomm delivered disappointing financial results in early February, providing weaker-than-anticipated guidance for the ongoing quarter. That announcement sparked a significant selloff that has persisted throughout March.
The stock currently trades at $133.81 in premarket activity, remaining below Bank of America’s $145 price target — which the firm nonetheless considers justification for an Underperform rating.
