Key Takeaways
- Bank of America Securities restarted coverage of Qualcomm with an Underperform rating and $145 price target
- Qualcomm faces a $7–8 billion annual revenue loss as Apple transitions to proprietary iPhone modems
- Galaxy devices from Samsung will see Qualcomm chip presence drop from 100% to roughly 75% by fall 2026
- Xiaomi’s $7 billion investment in custom chip development poses additional competitive threat
- Bank of America forecasts minimal 2% yearly revenue growth for Qualcomm extending to fiscal 2028
Shares of Qualcomm declined 3.1% to $133.81 during premarket hours Tuesday following Bank of America’s resumption of coverage with a negative Underperform designation. The chipmaker’s stock has now retreated 19% since the start of the year.
Bank of America established a $145 valuation target — representing merely 5% potential gain from Monday’s closing price. BofA analyst Vivek Arya pointed to sluggish expansion potential and intensifying competition throughout Qualcomm’s primary business segments.
The most significant threat comes from Apple. By fall 2027, Qualcomm’s modem chips are anticipated to be completely eliminated from iPhone production as Apple transitions to proprietary technology. Bank of America calculates this revenue loss at approximately $7–8 billion annually.
Apple, Samsung, and Xiaomi collectively represented roughly 54% of Qualcomm’s fiscal 2025 revenue. This customer concentration creates substantial vulnerability for the semiconductor manufacturer.
Samsung is following a comparable strategy. Bank of America reports that Qualcomm’s presence in Samsung’s fall 2026 Galaxy device portfolio will decrease from complete coverage to approximately 75%. This represents yet another significant revenue stream under pressure.
Xiaomi adds to these concerns. The Chinese smartphone manufacturer has allocated $7 billion toward developing proprietary chips — demonstrating a strategic pivot away from external semiconductor 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 Offset Mobile Losses?
Qualcomm has been aggressively expanding into automotive and Internet of Things sectors to compensate for smartphone market challenges. Bank of America forecasts that auto and IoT chip sales will expand at approximately 19% annually, potentially reaching $17.7 billion by fiscal 2028.
The company is also pursuing opportunities in AI infrastructure. However, Bank of America notes that even capturing 10–20% of the ARM-based server processor market would generate only $1–2 billion in revenue and contribute $0.20–$0.40 to earnings per share. This falls considerably short of offsetting a $7–8 billion revenue gap.
CEO Cristiano Amon offered some 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 additional challenges throughout the smartphone sector. This development may suppress demand for budget devices, though Qualcomm’s focus on premium segments provides some insulation.
Bank of America’s Revenue Projections
Bank of America anticipates Qualcomm’s revenue will expand at merely 2% per year through fiscal 2028. By comparison, the overall semiconductor industry is projected to achieve approximately 17% growth during this timeframe.
The investment bank noted that expansion into faster-growing markets is “largely offset by the potential loss of ~$7bn in Apple modem revenue and competitive share losses at Samsung.”
Qualcomm reported disappointing results in early February, providing below-consensus guidance for the subsequent quarter. This announcement sparked a significant stock decline that has persisted into March.
The stock currently trades at $133.81 in premarket activity, remaining below Bank of America’s $145 target price — which the firm nonetheless associates with an Underperform recommendation.
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