TLDRs:
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Qualcomm faces pre-launch volatility as QCOM shares drop amid handset memory concerns ahead of Samsung event
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Daiwa downgrade sparks market caution with analyst move raising questions about near-term stock performance
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Smartphone memory crunch weighs on production as DRAM shortages and pricing uncertainty affect handset OEMs globally
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Non-phone growth offers limited relief with automotive and data-center chips supporting revenue but risks persist
Qualcomm (NASDAQ: QCOM) is navigating choppy waters in early February, with investors weighing both short-term supply pressures and upcoming Android device launches.
Shares of the chipmaker slipped 1.8% during regular trading on Thursday, closing near $138.50, with after-hours activity showing little movement. The selloff comes amid a downgrade from Daiwa Securities, which lowered Qualcomm’s rating from “outperform” to “neutral” and set a price target of $140.
Analyst Downgrade Raises Caution
The Daiwa rating change adds to a growing list of analyst adjustments surrounding Qualcomm, signaling caution as the market closely monitors the company’s smartphone business. While the downgrade reflects short-term uncertainty, it also underscores a broader narrative, Qualcomm’s performance remains tethered to handset cycles, particularly amid looming memory constraints.
CFO Akash Palkhiwala noted on the company’s recent fiscal Q1 call that rising demand for AI data center memory has created near-term supply and pricing challenges for handset OEMs.
Memory Crunch Clouds Handset Outlook
Chief Executive Cristiano Amon was equally candid, describing the current issue as “100% related to memory,” specifically referencing DRAM supply inside smartphones. Memory shortages have squeezed buyers, forcing manufacturers to reconsider production plans, which in turn has pressured Qualcomm’s shipments.
Industry analysts, including Bob O’Donnell of TECHnalysis Research, expect this memory crunch to persist over the next several quarters, with China cited as a key hotspot for supply pressure. These factors contribute to market volatility as investors anticipate potential impacts on the company’s revenue targets, which range from $10.2 billion to $11 billion for fiscal Q2, with adjusted earnings per share projected between $2.45 and $2.65.
Upcoming Samsung Launch Adds Pressure
Looking ahead, all eyes are on Samsung’s Galaxy Unpacked event scheduled for February 25 in San Francisco. Qualcomm supplies Snapdragon processors and modems for a wide range of flagship Android devices, meaning that its order flow and product mix often shift with each new phone cycle.
Any delays or adjustments in handset production due to memory issues could directly affect the chipmaker’s quarterly performance. Moreover, Qualcomm faces stiff competition from MediaTek in the Android space, while Apple and Samsung continue to develop in-house chips, potentially limiting Qualcomm’s market share in the next device cycle.
Non-Phone Markets Offer Some Support
While handset uncertainty dominates the near-term outlook, Qualcomm has increasingly leaned on non-phone markets to support growth. Automotive chips, connected devices, and data-center processors provide alternative revenue streams and have received significant attention from investors.
However, these segments may not fully offset volatility stemming from smartphone memory constraints. As traders assess the impact of the Daiwa downgrade, the market will also be watching for broader chip-sector rebounds and any further revisions to Qualcomm’s price targets. Investors’ next major checkpoint is Qualcomm’s earnings report scheduled for May 6, which will provide clearer guidance on how the memory crunch and upcoming Android device launches influence the company’s financial performance.
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