Bank of America has highlighted key semiconductor companies that sell into consumer markets, particularly mobile devices, noting that demand in that segment remains under pressure. The firm cautions that weak smartphone demand could continue through 2027 unless there is a stabilization in memory prices.
The bank's analysis focuses on firms attempting to mitigate the near-term slump in handset volumes by broadening end-market exposure and pursuing new product and platform opportunities. Two names singled out in the note are Qualcomm and Skyworks Solutions, with detailed valuation, upside scenarios and downside risks laid out for each.
Qualcomm (QCOM)
Bank of America assigns a $145 price target to Qualcomm, arrived at by applying 13 times its estimated 2027 non-GAAP earnings per share of $11.55, excluding stock-based compensation. That multiple places Qualcomm at a valuation discount relative to both diversified and analog peers that trade between 12 and 25 times earnings, as well as compute and AI peers that trade in the 17-19 times range. The lower multiple reflects a more muted growth outlook for Qualcomm and its limited exposure to data center infrastructure buildout.
The bank lists specific downside risks for the company. Those include an expected modem roll-off at Qualcomm's largest customer worth $7-8 billion by fall 2027; the potential for share loss at a key Android customer from full share to 75%; additional customer insourcing of components; licensing renewal risk in the first half of 2027; exposure to China; and competition within the crowded AI data center market.
Conversely, Bank of America identifies several upside paths. Qualcomm's ongoing diversification into automotive and Internet of Things businesses targets $22 billion in revenue by fiscal 2029. Additional upside sources noted are AI inference accelerators, Nuvia ARM CPUs, a shift toward a higher-premium product mix, and growing on-device AI content.
Recent market developments mentioned in the bank's note include an increased price target from Tigress Financial Partners, which cited growth opportunities in AI, automotive and IoT, together with Qualcomm's announcement of a $20 billion share buyback program. Aletheia Capital is also cited as having maintained a Hold rating while noting gains in Qualcomm's AI business.
Skyworks Solutions (SWKS)
Bank of America sets a $60 price objective for Skyworks Solutions, using an 11-times multiple on the company's 2027 estimated price-to-earnings ratio excluding stock compensation expense. That valuation sits within Skyworks' historical trading range of 8 to 22 times earnings and is framed as balancing potential sector re-rating and AI-driven smartphone tailwinds against merger and acquisition overhang and the risk of content loss on iPhone 17.
The bank outlines upside scenarios for Skyworks that include market share gains, continued benefits from 5G adoption, broader semiconductor industry consolidation, distinctive merger and acquisition opportunities that could drive stronger growth, and successful execution on the proposed merger with Qorvo.
On the downside, Bank of America points to concentrated customer exposure as a material risk. Apple accounts for roughly 70% of Skyworks' sales, leaving the company vulnerable to share loss. Additional downside risks are a sharper-than-expected year-over-year decline in smartphone unit shipments and faster-than-anticipated average selling price degradation if Skyworks lacks pricing power.
Operationally, the bank's note references Skyworks' second-quarter fiscal 2026 results, which beat analyst expectations with earnings per share of $1.15 and revenue of $944 million.
Takeaway
Bank of America's coverage underscores how consumer-facing semiconductor suppliers are attempting to counteract weak handset demand through diversification and strategic initiatives. For investors and industry watchers, the note offers a valuation framework and clearly enumerates both company-specific and market-wide levers that could alter outcomes for Qualcomm and Skyworks.
As the consumer semiconductor cycle remains soft, the companies' success in expanding into automotive, IoT and AI inference on-device or in adjacent markets will be central to any recovery in their earnings trajectories, according to the scenarios outlined by the bank.