- Company name
- Qualcomm
- Sector
- Semiconductors & wireless technology licensing
- About
- Qualcomm makes money two ways. The larger business, QCT, designs and sells Snapdragon chips: application processors and modems for smartphones, automotive infotainment and driver-assistance systems, chips for IoT devices, chips for Windows laptops, and, most recently, chips for AI data centers. The smaller business, QTL, licenses Qualcomm's patents on mobile technology such as 3G, 4G, and 5G. QTL charges device makers a royalty based on the wholesale price of the phone, whether or not that phone uses a Qualcomm chip, which makes it a high-margin, steady stream of profit. For years, most of Qualcomm's revenue came from smartphone chips sold to Android makers and to Apple. Qualcomm is now pushing to diversify: automotive chip revenue has grown by double digits every quarter for more than five years, and in December 2025 Qualcomm closed its $2.4 billion purchase of Alphawave Semi to gain the connectivity and compute building blocks for a new data-center AI chip line, the AI200 and AI250. Cristiano Amon is CEO. China, mostly through Chinese phone makers like Xiaomi, Oppo, and Vivo, made up about 46% of fiscal 2025 revenue.
- Thesis
- QCOM trades around $197.24, about 16% above the analysts' $170 fair value estimate, and the analysts rate the stock's uncertainty "High" and its moat only "Narrow." The market is paying up for a story still mostly ahead of it: Qualcomm's new AI200 and AI250 data-center inference chips, a September 2026 deal with Amazon Web Services to build custom AI chips (up to $60 billion of potential business over 10 years, alongside a warrant letting Amazon buy about $4 billion of Qualcomm stock), and an October 2025 deal with Saudi-backed Humain to deploy 200 megawatts of AI200 racks. Automotive keeps compounding too, up 61% year-over-year in fiscal Q3 2026, its 23rd straight quarter of double-digit growth. Buybacks and dividends support the stock further: a new $20 billion repurchase authorization and a dividend raised to $0.92 per share came in March 2026. The premium can be justified if the data-center chips convert to real, growing revenue starting in the December 2026 quarter as management expects, and if automotive and IoT keep offsetting the well-flagged decline in Apple's business. The honest counter-case: none of the AI data-center deals have produced revenue yet, they are new and unproven against Nvidia and AMD, Apple's modem and RF revenue is shrinking fast and disappears entirely by 2027, and the core handset chip business already fell 20% year-over-year in fiscal Q3 2026. Paying a 16% premium over fair value for a company rated "High" uncertainty leaves little cushion if any of that slips.
- Risks
- Apple is replacing Qualcomm's modems with its own in-house chips. Qualcomm expects Apple-related product revenue to fall about 50% from fiscal Q3 to Q4 2026, its iPhone share to be "materially lower" than a prior 20% estimate, and its Apple business to end entirely by 2027.
Much of the stock's premium over fair value depends on data-center AI chips (AI200/AI250) and deals like the Amazon and Humain partnerships turning into real revenue. None of this has generated revenue yet; Qualcomm expects it to start only in the December 2026 quarter, against established competitors like Nvidia and AMD.
China, mostly through phone makers like Xiaomi, Oppo, and Vivo, made up about 46% of fiscal 2025 revenue. China's market regulator opened an antitrust investigation into Qualcomm in October 2025 over an undisclosed acquisition, adding regulatory risk in Qualcomm's largest market.
The core handset chip business is shrinking. QCT handset revenue fell 20% year-over-year in fiscal Q3 2026 on memory supply constraints, higher input costs, and softer demand from Chinese smartphone makers. Qualcomm said it would raise chip prices from September 1, 2026 to offset costs, which could pressure demand further.
The stock already trades about 16% above the analysts' fair value estimate, and the analysts rate the estimate's uncertainty "High." This leaves little cushion if the AI data-center or automotive growth stories disappoint.
Arm Holdings continues to contest its licensing dispute with Qualcomm despite losing in court in 2024 and again in September 2025. A separate Qualcomm lawsuit against Arm was set for trial in March 2026. Continued litigation could raise costs or create uncertainty around Qualcomm's Oryon CPU cores.
Qualcomm's new data-center push depends heavily on a small number of large customers, such as Amazon and Humain, echoing the customer-concentration risk it already has in smartphones.
- Recent events
- 2026-09-08: Qualcomm and Amazon announced a partnership to build custom AI inference chips and optical networking for AWS data centers. Amazon's maximum contracted purchase is $60 billion over 10 years, and Qualcomm gave Amazon a warrant to buy about 25 million Qualcomm shares (roughly $4 billion) at $161.26 each. Qualcomm expects revenue from the deal to begin in the December 2026 quarter.
2026-07-29: Qualcomm reported fiscal Q3 2026 results: revenue of $9.9 billion, QCT revenue of $8.5 billion (handsets $5.1 billion, down 20% year-over-year; automotive $1.6 billion, up 61%; IoT $1.8 billion, up 9%), and QTL revenue of $1.3 billion. Non-GAAP EPS was $2.21; GAAP net income was $2.0 billion, down 25% year-over-year.
2026-07-29: Management guided fiscal Q4 2026 revenue to $9.7-$10.5 billion and non-GAAP EPS to $2.05-$2.25. It said Apple-related product revenue would fall about 50% from Q3 to Q4 as Apple's in-house modem ramps, with Qualcomm's iPhone share "materially lower" than a prior 20% estimate, and said China revenue likely bottomed in the June quarter.
2026-03-17: The board raised the quarterly dividend from $0.89 to $0.92 per share and approved a new $20 billion stock repurchase authorization, with no expiration date.
2026-01-20: Qualcomm unveiled the AI200 and AI250, its first purpose-built data-center AI inference chips, based on its Hexagon NPU. The AI200 is expected to be commercially available in 2026 and the AI250 in 2027.
2025-12-18: Qualcomm completed its $2.4 billion acquisition of Alphawave Semi, a UK chip-connectivity company, a quarter ahead of schedule. Alphawave's CEO, Tony Pialis, now leads Qualcomm's data-center business.
2025-10-27: Qualcomm and Saudi-backed Humain announced a deal for Humain to deploy 200 megawatts of Qualcomm AI200/AI250 rack-scale AI inference infrastructure, starting in 2026.
2025-10-10: China's market regulator (SAMR) opened an antitrust investigation into Qualcomm, saying the company failed to properly disclose its 2025 acquisition of Israeli chipmaker Autotalks as required under China's anti-monopoly law.