I’ve Started Accumulating Qualcomm and It Isn’t Because of Amazon and Meta
Qualcomm's automotive and data center businesses are quietly rewriting the company's story while everyone debates the Apple modem loss, and that tension is exactly why the buy button keeps getting hit.
I keep hitting the buy button on Qualcomm (NASDAQ:QCOM | QCOM Price Prediction), and the Amazon warrant deal announced September 8 only gave me another reason to keep going. My conviction started well before the hyperscaler headlines. What pulls me back is a chip company that stopped being a smartphone story and started becoming an automotive, industrial, and data center story while quietly returning cash at a pace that rewards patience.
Why the Buy Button Stays Active
Start with the trajectory nobody talks about at dinner parties. Automotive revenue reached $1.59 billion in the quarter, up 61% year over year, marking 23 consecutive quarters of double-digit YoY growth. Combined automotive and IoT climbed 28% YoY. Management raised its exiting fiscal 2026 automotive annualized run-rate to approximately $7 billion, up from a prior $6 billion target, on the strength of an expanded BMW agreement extending well into the next decade and a Stellantis pipeline stretching into the 2030s.
Then the data center. CEO Cristiano Amon told investors non-handset revenue should reach $40 billion by fiscal 2029, nearly double the target shared in November 2024, with growth accelerating from 24% in fiscal 2026 to greater than 60% in fiscal 2027. Two hyperscaler custom-silicon engagements have purchase orders in hand, wafer production underway, and revenue starting in the December quarter. Data center revenue is guided to $5 billion in fiscal 2027 and $15 billion in fiscal 2029.
Capital return is the third leg I keep leaning on. Full fiscal 2025 free cash flow reached $12.82 billion, up 14.86% YoY, and the company sent $12.60 billion back to shareholders through dividends and buybacks. Q3 FY26 alone included a $0.92 dividend and $1.4 billion in repurchases. The current yield sits at 1.98% with a free cash flow yield of 6.66%, and I own it at a P/E of 35 that compresses fast against forward EPS estimates near $10.4827 for the fiscal year ending September 2026.
Why Not the Obvious Alternative
The name a reader might reach for first here is Apple (NASDAQ:AAPL), Qualcomm’s largest premium handset customer and the very company vertically integrating away from Qualcomm modems. That is precisely why I keep buying Qualcomm instead. The company disclosed that total QCT non-Apple fiscal 2025 revenues grew 18% YoY. Management now expects fiscal 2027 non-handset growth to replace total Apple product revenues in fiscal 2026. Buying Apple to get the modem story means paying for the customer who is walking. Buying Qualcomm means owning the supplier already engineering around that departure.
Risk I Refuse to Wave Away
Handset revenue fell 20% YoY to $5.09 billion in Q3, and management pegged the EPS impact at greater than $1.50. Apple share for the upcoming iPhone will be materially lower than the prior 20% estimate, with roughly a 50% decline in Apple revenue from the September quarter to the December quarter. That is real. What settles me is that Qualcomm is pricing through the cost pressure with double-digit increases and guiding the baseline back to a 48% to 50% gross margin range while non-handset businesses inflect.
What Keeps Me Buying From Here
I own a chipmaker at a fair multiple that pays me to wait, generates 6.66% free cash flow yield, prints 23.34% ROE, and just signed a multi-generational data center collaboration with Amazon on top of an automotive book stretching into the 2030s. The Amazon and Meta headlines are the catalyst other people needed (the same AI buildout is why we pulled together seven non-chipmaker suppliers powering the data centers in a free report). My conviction was built on the boring parts, and the boring parts keep printing.
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Alex Sirois is a financial writer with experience spanning both retail and institutional investing. He has written for InvestorPlace and held roles at BNY Mellon and Bernstein, giving him a perspective that bridges Main Street portfolios and Wall Street analysis.
Alex holds an MBA from George Washington University and has built his career across multiple industries, including e-commerce, education, and translation — a breadth of experience that informs how he breaks down complex financial topics for everyday investors. His writing is conversational, actionable, and grounded in long-term, buy-and-hold investing principles.
At 247 Wall St., Alex focuses on delivering analysis that is both accessible and useful, with a clear emphasis on helping readers make more informed decisions with their money.
