Why Qualcomm's Stock Isn't Soaring Like Its Rivals

Qualcomm Inc. QCOM has underperformed the PHLX Semiconductor Index year-to-date, with returns of approximately 6% for QCOM compared to the index’s roughly 13%.

The divergence is starker over three months, where Qualcomm’s ~6% gains pale against the index’s 30% AI-driven rally, even with U.S.-China tech restrictions.

The gap is evident when looking at its peers in the GPU and custom chip space, Nvidia Corp. NVDA generated ~43% returns, Broadcom Inc. AVGO a robust 57%, Advanced Micro Devices, Inc. AMD 35%, and Marvell Technology, Inc. MRVL ~18%.

Also Read: Qualcomm Eyes Alphawave To Power AI And Data Center Growth, Analyst Sees Strategic Fit

Given this performance disparity, it’s crucial to assess Qualcomm’s current difficulties and its strategies for improvement.

Qualcomm’s core business spans chipsets, software, and products for mobile, automotive, and IoT. A notable impact on Qualcomm’s revenue stemmed from the slowdown in Apple Inc.’s AAPL shipments, as Apple previously relied on Qualcomm for modem chips that connect iPhones to wireless networks.

This gradual transition by Apple to its in-house chips has, in turn, spurred Qualcomm to strategically re-enter the data center CPU market, a segment currently dominated by AMD and Intel Corp. INTC.

Looking ahead, Qualcomm has set an ambitious goal to generate $22 billion in non-handset revenue by 2029, with AI identified as a pivotal driver for this expansion.

Central to this strategy is a planned integration of Nvidia technology into future chips to optimize GPU communication for its AI data center offerings.

Following a prior pause on an Arm-based CPU project with Meta Platforms, Inc. META, Qualcomm has revived its data center CPU initiatives and re-engaged in discussions. Additionally, a strategic partnership with Saudi AI firm Humain is underway to co-develop a custom data center CPU.

Beyond AI, Qualcomm sees substantial growth in the autonomous vehicle market. Bank of America analyst Martyn Briggs highlights this sector’s potential, likening its current trajectory to the “ChatGPT moment” in AI.

Despite its stock underperformance, Qualcomm demonstrated solid operational results, exceeding second-quarter expectations with $10.84 billion in revenue and $2.85 EPS. This was driven by robust performance across its Handsets, IoT, and Automotive segments.

Notably, Qualcomm CDMA Technologies (QCT) revenue surged 18% year-over-year, boosted by Snapdragon adoption, AI-enabled IoT solutions, and a 59% growth in Automotive from new global OEM contracts.

Looking ahead, analysts project QCT to expand approximately 12% year-over-year in the third quarter, with IoT and Automotive forecasted to see 15% and 20% growth, respectively.

Qualcomm’s China business remains resilient, underpinned by premium Android subsidies and consistent design wins.

For the June quarter, revenue guidance stands at $9.9 billion-$10.7 billion, with EPS projected at $2.60-$2.80. The launch of Samsung’s SSNLF Snapdragon-based foldables could provide an additional boost to handset sales.

Analyst sentiment reflects cautious optimism, with a consensus price forecast of $186.71 based on 32 analyst ratings. Price forecasts range from a high of $270 (Tigress Financial, June 21, 2024) to a low of $140 (Wells Fargo, May 1, 2025). The average forecast of $170.67 suggests a potential 5.16% upside for Qualcomm from current levels.

Qualcomm is actively transforming its business beyond smartphones to overcome its stock underperformance against the semiconductor index and rivals. By focusing on high-growth areas like AI data center CPUs (including partnerships with Nvidia and renewed Meta discussions) and autonomous vehicles, and aiming for $22 billion in non-handset revenue by 2029, Qualcomm seeks to diversify. Despite a lagging stock, strong second-quarter results and analyst price forecasts suggest potential upside as its strategic pivot unfolds.

Price Action: Qualcomm stock is trading higher by 0.38% to $162.95 premarket at last check Thursday.

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