Qualcomm (QCOM.US) performance exceeds expectations but prospects are worrisome: the AI layout is being questioned by Wall Street, and Apple's self-developed chips are under potential pressure

The Zhitong Finance App learned that Wall Street analysts said that Qualcomm (QCOM.US)'s quarterly results and performance guidelines indicate that the company's diversification plans are progressing. But smartphone-related concerns remain a major issue.

Yesterday, thanks to a recovery in demand in the smartphone terminal market, Qualcomm released revenue and profit guidelines that exceeded expectations.

Qualcomm said it expects adjusted earnings per share for the first quarter of fiscal year 2025 to be $3.30-3.50. Revenue is estimated to be between US$11.8 billion and US$12.6 billion, of which Qualcomm Technology Business (QCT) revenue is US$10.3 billion to US$10.9 billion. Analysts had expected adjusted earnings per share of $3.26 and revenue of $11.59 billion.

As of press time, the stock rose slightly by 0.12% in overnight trading.

Citibank analyst Christopher Danieli said that although Qualcomm's performance was better than expected, losing the Apple (AAPL.US) business may “drag down” its performance.

In his report to clients, Danieli wrote, “We raised our earnings estimates but maintained a neutral rating because we think Apple's switch to homegrown modems would put pressure on Qualcomm's earnings per share (EPS).”

He raised Qualcomm's price target slightly from $175 to $180 while reaffirming his holding rating.

HSBC analyst Frank Lee shared similar views and pointed out that although data center announcements are helpful, Qualcomm's chips may not be as good as products from companies such as Nvidia (NVDA.US) and Chaowei Semiconductor (AMD.US).

“We acknowledge that Qualcomm's AI narrative continues to improve following the acquisition of Alphawave, and the company recently announced plans to launch AI200 and AI250 rack AI inference solutions in fiscal 2026 and 2027,” Lee said in the report.

“However... the specs of these chips seem to fall short of their peers — Qualcomm will use low-power DDR memory (LPDDR), while peers use high-bandwidth memory (HBM); until product specifications, roadmaps, and customer channels are more clear, revenue opportunities for the 2026-2027 fiscal year may be limited (we estimate $675 million to $2 billion).

Furthermore, the rise in OEM prices for TSM.US, the shortage of BT substrate components, and the adoption of a higher proportion of Arm v9 architecture patent fees in smartphone system-level chips (SoCs) may all put pressure on gross margins, and this pressure will continue until the first half of 2026.”

Lee reiterated that he holds a rating and a target price of $170. He said that if the data center business meets revenue standards, the adverse effects related to Apple may be offset. “However, we still need more details before incorporating these AI products into our expectations,” he added.

Several other research firms raised their price targets after Qualcomm released their results, including Melius and Mizuho Securities, which raised their price targets from $165 and $185 to $195 and $200, respectively.