Analysts at Bank of America reinstated coverage of Qualcomm Inc (NASDAQ:QCOM, XETRA:QCI) on Tuesday with an ‘Underperform’ rating and a $145 price target, pointing to modest long-term growth expectations and several competitive and customer-related headwinds.
Shares of Qualcomm traded hands at about $135 on Tuesday afternoon.
The analysts wrote that they expect Qualcomm’s revenue and earnings to grow at a much slower pace than the industry overall over the next several years, forecasting about 2% annual sales growth and roughly 1% annual earnings-per-share growth between 2025 and 2028, compared with around 17% expected growth for the semiconductor sector.
The analysts see Qualcomm as a leader in smartphone processors, but noted the handset chip market has matured and faces potential headwinds, including higher memory prices and a decline in business from Apple. They added that the company faces the well-known imminent ~$7 billion to $8 billion loss of Apple business.
Apple has historically been one of Qualcomm’s largest modem customers, but the bank expects the relationship to wind down as the iPhone maker shifts to its own internally developed chips. “QCOM's modems will be completely phased out of iPhones by Fall 2027 as top customer Apple shifts to internal modems,” they wrote.
The report also highlighted a broader trend of smartphone manufacturers investing in their own semiconductor capabilities. Samsung has reduced Qualcomm’s share of processors used in its Galaxy lineup, while Chinese smartphone maker Xiaomi has committed about $7 billion toward internal silicon research and development.
Bank of America pointed to growth opportunities in Qualcomm’s diversification efforts, particularly in automotive and Internet of Things chips. Those segments are expected to grow at roughly a 19% compound annual growth rate between fiscal 2025 and 2028, potentially reaching about $17.7 billion in revenue.
The analysts also noted Qualcomm’s efforts to expand into artificial intelligence infrastructure. They wrote that the company’s AI200 and AI250 inference accelerators, combined with cost-efficient LPDDR memory and upcoming Arm-based CPUs from the Nuvia acquisition, could expand Qualcomm’s addressable market by more than $200 billion in accelerators and over $60 billion in CPUs.
Still, Bank of America cautioned that competition remains strong across Qualcomm’s end markets. MediaTek continues to move upmarket in smartphones, while companies including Nvidia and Mobileye compete in automotive chips. The data center CPU market is also crowded, and the analysts wrote that Qualcomm’s potential share may represent only a small portion of the overall opportunity.