Key Takeaways
- Bank of America Securities resumed Qualcomm coverage with an Underperform rating and $145 price target
- The chipmaker faces a $7–8 billion revenue decline as Apple transitions away from Qualcomm modems
- Qualcomm’s share in Samsung Galaxy devices will drop from 100% to approximately 75% by fall 2026
- Chinese smartphone giant Xiaomi is investing $7 billion in proprietary chip development
- Annual revenue growth is forecast at merely 2% through fiscal year 2028, per BofA analysis
Shares of Qualcomm tumbled 3.1% to $133.81 during Tuesday’s premarket session following Bank of America’s decision to reinstate coverage with a bearish stance. The decline extends the stock’s year-to-date losses to 19%.
Bank of America assigned a $145 price target to the semiconductor company, suggesting minimal upside potential of roughly 5% from Monday’s closing price. Analyst Vivek Arya pointed to lackluster growth trajectories and intensifying competitive threats throughout Qualcomm’s primary business segments.
The most pressing concern centers on Apple. By the fall of 2027, Qualcomm’s modem chips are anticipated to be completely removed from iPhone devices as Apple transitions to internally designed alternatives. Bank of America calculates this shift will eliminate approximately $7–8 billion in annual sales.
Apple, Samsung, and Xiaomi collectively accounted for roughly 54% of Qualcomm’s fiscal 2025 revenue. This heavy customer concentration creates significant vulnerability as these partners pursue vertical integration strategies.
Samsung is implementing a comparable strategy. The South Korean electronics giant will reduce Qualcomm’s presence in its fall 2026 Galaxy smartphone series from complete dominance to approximately 75%, according to BofA’s analysis. This represents yet another substantial revenue stream under threat.
Additionally, Xiaomi has allocated $7 billion toward developing proprietary semiconductor solutions — a definitive indication that the company intends to decrease dependence on third-party 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 Compensate for Mobile Losses?
Qualcomm has been aggressively expanding into automotive and Internet of Things sectors to counterbalance declining smartphone chip sales. Bank of America forecasts automotive and IoT chipset sales will expand at approximately 19% annually, potentially reaching $17.7 billion by fiscal 2028.
The company is also exploring opportunities in AI infrastructure. However, even if Qualcomm secures 10–20% of the ARM-based server processor market, BofA calculates this would generate only $1–2 billion in revenue and contribute $0.20–$0.40 in additional earnings per share. This modest gain barely dents the $7–8 billion revenue shortfall.
CEO Cristiano Amon expressed cautious 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 headwinds throughout the smartphone ecosystem. This situation could negatively impact budget device sales, although Qualcomm’s focus on premium segments provides some insulation.
Bank of America’s Revenue Projections
Bank of America anticipates Qualcomm will achieve only 2% annual revenue growth through fiscal 2028. By comparison, the semiconductor industry overall is projected to expand at approximately 17% during this timeframe.
The investment bank noted that Qualcomm’s 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, issuing below-consensus guidance for the upcoming quarter. This announcement triggered a substantial stock price decline that has persisted throughout March.
Premarket trading shows the stock at $133.81, trading below even BofA’s $145 price target — which the bank itself categorizes as justifying an Underperform rating.
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