Qualcomm at $175: The Narrative Shift Sending Capital Out The Door
Qualcomm is betting its future on AI and data center chips while its smartphone business bleeds, and the December quarter will prove whether that bet pays off or exposes a company caught between two worlds.
Qualcomm (NASDAQ:QCOM | QCOM Price Prediction) trades at $176.86. Qualcomm has transformed itself from a smartphone chip supplier into an AI and data center company in a single investor cycle, and the market is still deciding whether to pay for that change.
Qualcomm sells Snapdragon processors through its QCT segment and licenses wireless patents through QTL. Its fiscal third quarter showed both sides of the business. Handset revenue fell 20% YoY to $5.09B, while automotive revenue rose 61% to $1.59B. Non-GAAP EPS of $2.21 came in just below the $2.22 estimate, which ended a six-quarter beat run. The stock trades 31% below its 52-week high of $257.56.
AI Pivot Doubles Qualcomm’s Non-Handset Target
Management raised its fiscal 2029 non-handset revenue target to $40 billion from $22 billion. That figure includes more than $15 billion in data center revenue. Two custom silicon projects with global-scale hyperscalers start producing revenue in the December quarter, and purchase orders are already in place. Non-handset growth is expected to speed up from 24% in FY2026 to above 60% in FY2027.
Automotive has posted 23 consecutive quarters of double-digit growth, and BMW has named Qualcomm its lead compute supplier. Even so, the stock trades at a forward P/E of about 20, with a PEG ratio of 0.88 and a free cash flow yield near 6.79%.
Shrinking Handset Sales and Rising Costs Weigh on Qualcomm
The turn toward AI is costing a lot up front. Operating income fell 41.13% YoY as Qualcomm paid for the Modular and Alphawave acquisitions and its data center roadmap. Custom-chip revenue will also lower QCT gross margin by 1.5% to 2%. Meanwhile, the core business keeps shrinking. Qualcomm’s chips will appear in a much smaller share of new iPhones, and revenue from Apple (NASDAQ:AAPL) is expected to fall about 50% from the September quarter to the December quarter. Weakness in Android is expected to reduce EPS by more than $1.50.
Chief executive Cristiano Amon acknowledged the doubt directly: “investors want to see more proof points that we can successfully execute on our plans as a new entrant.”
Price Increases and December Data Center Revenue Will Decide the Next Move
Qualcomm is raising prices by double-digit percentages to offset higher memory, wafer and packaging costs. Management expects QCT gross margin to return to 48% to 50% as those increases take effect. Revenue from Chinese handset makers bottomed in the June quarter. Big funds are split: 6 tracked filers added shares, 4 cut and 2 sold out entirely.
Most Analysts Rate It Hold, With a $194 Average Target
The average analyst target of $194.13 implies about 9.8% upside. Analyst targets are estimates and can change. Here is how the 37 analysts covering the stock rate it:
- Strong Buy: 2
- Buy: 9
- Hold: 23
- Sell: 1
- Strong Sell: 2
Qualcomm is up 5.03% year to date, compared with 14.1% for the S&P 500. Over one year, Qualcomm gained 11.62% while the index rose 17.35%.
December Data Center Revenue Is Qualcomm’s Key Test
At $176.86, Qualcomm’s outlook depends on execution.
The current price already reflects a lot of handset weakness, but Qualcomm has not yet shown it can earn money in AI. The first test is the December quarter, when hyperscaler revenue should start to come in. Management expects revenue to rise slightly from the prior quarter in that period, even with Apple revenue falling. All of that data center expansion has to be powered, cooled, and networked by somebody, and we rounded up seven suppliers riding the same wave in a free AI infrastructure report.
A stronger outlook would need two things: QCT margins returning to the 48% to 50% range, and data center revenue tracking toward the $5 billion fiscal 2027 goal. Android staying weak beyond the price increases or a slip in the custom silicon ramp would weaken the outlook. The 2.05% dividend yield provides income in the meantime.
The December quarter will show whether Qualcomm’s AI plan produces revenue.
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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.
