Bank of America has restored coverage of Qualcomm with an Underperform rating, asserting that the chipmaker faces limited upside amid tepid growth forecasts and mounting competition across its primary markets.
The firm assigned a $145 price objective for Qualcomm, which the bank said implies roughly 5% upside from Monday's closing price.
Analyst Vivek Arya framed the call around a constrained growth outlook, forecasting a compound annual growth rate of approximately +2% in sales and +1% in EPS for calendar years 2025 through 2028, compared with a +17% CAGR the bank models for the broader semiconductor sector. As Arya put it: "We reinstate coverage of Qualcomm with an Underperform rating and a $145 PO due to lukewarm +2%/+1% sales/EPS CY25-28E CAGR vs. semis at +17%."
Arya described Qualcomm as a leader in smartphone processors but characterized that space as mature and vulnerable to specific downside pressures. He pointed to rising memory prices and what he called Qualcomm's "well-known imminent ~$7-8bn loss of Apple business" as material near-term risks.
The analyst said Qualcomm's modem presence in Apple iPhones is expected to be eliminated entirely by fall 2027 as Apple transitions to internally designed chips. In parallel, other large device makers are stepping up investments in proprietary silicon: Samsung is projected to reduce Qualcomm's share in Galaxy devices from 100% to roughly 75%, while Xiaomi has committed around $7 billion toward developing internal semiconductor capabilities.
Arya highlighted concentration risk in Qualcomm's customer base, noting that Apple, Samsung and Xiaomi together made up roughly 54% of Qualcomm's revenue in fiscal 2025. That dependence on a small set of major customers is identified as a key vulnerability for the company's revenue profile.
Qualcomm has been expanding its footprint beyond mobile into automotive and Internet-of-Things chip businesses. Arya acknowledged those efforts as central to the company's diversification strategy but judged that gains there may not fully counterbalance pressures in the handset market. BofA's view projects combined auto and IoT chipset revenue to grow at roughly a 19% compound annual rate to about $17.7 billion by fiscal 2028.
Separately, Qualcomm's stated ambitions in AI infrastructure - specifically ARM-based server CPUs - are cited as a potential upside catalyst, but Arya described the opportunity as limited given a crowded competitive landscape. He estimated that even capturing a 10% to 20% share of the ARM-based server CPU market would translate into only $1-2 billion in revenue and approximately $0.20-$0.40 of incremental earnings per share.
Readers weighing Qualcomm as an investment should note BofA's assessment that the company's core mobile franchise faces structural and client-concentration headwinds, while newer end markets like auto, IoT and AI infrastructure offer growth but may be insufficient in scale to restore the model to the broader semiconductor sector's expected growth trajectory.
Key points
- BofA reinstated coverage with an Underperform rating and a $145 price objective, implying about 5% upside from Monday's close.
- Analyst Vivek Arya forecasts muted sales and EPS growth for Qualcomm in CY25-28E (+2% sales / +1% EPS CAGR), versus a +17% CAGR for the semiconductor sector.
- Qualcomm faces significant customer and product concentration risk as Apple, Samsung and Xiaomi accounted for roughly 54% of fiscal 2025 revenue; mobile modem revenue from Apple is expected to phase out by fall 2027.
Risks and uncertainties
- Customer concentration: Heavy reliance on a few OEMs (Apple, Samsung, Xiaomi) could magnify revenue volatility if those customers further internalize chip design - impacts mobile and semiconductor supply chains.
- Competitive displacement: Large customers moving to in-house silicon or reducing Qualcomm's share (e.g., Samsung from 100% to roughly 75%) can pressure mobile segment revenue and margins - affecting handset suppliers and the broader mobile ecosystem.
- Limited offset from diversification: Growth in auto and IoT chip revenue and potential AI infrastructure gains may not fully compensate for mobile declines; this uncertainty affects automotive suppliers, IoT device makers, and data center component markets.