Key Takeaways
- BofA Securities reinstated coverage of Qualcomm with an Underperform rating and $145 price target
- The chipmaker faces an estimated $7–8 billion revenue loss as Apple transitions to in-house modems for iPhones
- Samsung plans to reduce Qualcomm’s share in Galaxy devices from 100% to approximately 75% by fall 2026
- Xiaomi allocated $7 billion toward developing proprietary chips
- BofA forecasts Qualcomm’s annual revenue growth at a mere 2% through fiscal 2028
Shares of Qualcomm fell 3.1% to $133.81 during premarket trading on Tuesday following Bank of America’s reinstatement of coverage with an Underperform rating. The decline extends the stock’s year-to-date losses to 19%.
Bank of America established a $145 price target, suggesting modest upside of approximately 5% from Monday’s closing price. Analyst Vivek Arya pointed to sluggish growth expectations and intensifying competitive challenges throughout Qualcomm’s primary business segments.
The most significant threat comes from Apple. The iPhone maker plans to completely eliminate Qualcomm modems from its devices by fall 2027, replacing them with proprietary chips. Bank of America calculates this transition will strip away approximately $7–8 billion in revenue.
Apple, Samsung, and Xiaomi collectively accounted for approximately 54% of Qualcomm’s fiscal 2025 revenue. This heavy customer concentration creates substantial vulnerability for the semiconductor company.
Samsung represents another growing concern. The Korean electronics giant will reduce Qualcomm’s presence in its fall 2026 Galaxy smartphone series from complete dominance to roughly 75%, per BofA’s analysis. This shift represents additional revenue erosion.
Xiaomi adds to the mounting pressure. The Chinese manufacturer pledged $7 billion toward in-house chip development, signaling a strategic move away from dependence on 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.
Diversification Strategy Under Scrutiny
Qualcomm has been expanding aggressively into automotive and Internet of Things markets as a counterbalance to smartphone headwinds. BofA forecasts auto and IoT chipset sales will expand at approximately 19% annually, potentially reaching $17.7 billion by fiscal 2028.
The company also targets AI infrastructure opportunities. However, BofA calculates that capturing 10–20% of the ARM-based server CPU market would generate merely $1–2 billion in revenue and contribute $0.20–$0.40 to earnings per share. This potential gain pales against a $7–8 billion revenue deficit.
CEO Cristiano Amon expressed measured confidence 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 dynamic may suppress sales of budget-oriented devices, though Qualcomm’s focus on premium segments provides some insulation.
Projected Growth Trajectory from BofA
Bank of America anticipates Qualcomm’s revenue will expand at only 2% per year through fiscal 2028. This stands in stark contrast to the broader semiconductor industry, which is expected to achieve approximately 17% growth during the identical timeframe.
The investment bank noted that expansion into faster-growing 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, providing below-consensus guidance for the subsequent quarter. This announcement triggered a substantial selloff that has persisted throughout March.
The stock currently trades at $133.81 in premarket activity, positioned below BofA’s $145 price target, which the bank categorizes as a sell-level valuation.
