Can QUALCOMM's (QCOM) Expansion Beyond Handsets Offset the Loss of a Major Customer?

• QUALCOMM reported third-quarter earnings with revenue of US$10.37 billion and net income of US$2.67 billion, marking solid year-over-year growth, while also expanding its automotive and IoT businesses and completing a sizable share buyback program.
• This strong performance highlighted the company's diversification beyond handsets, but concerns around future revenue due to the loss of Apple as a modem customer remain an important factor for investors.
• We'll explore how QUALCOMM's robust automotive and IoT growth influences its longer-term investment case given ongoing shifts in customer mix.

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QUALCOMM Investment Narrative Recap

To own QUALCOMM shares right now, you need confidence in the company's ability to offset handset challenges by expanding in automotive and IoT markets. While the recent quarterly results showcased solid growth in these areas, immediate investor attention remains fixed on how quickly QUALCOMM can counterbalance the expected drop in revenue after Apple moves away as a modem customer, this risk remains central, and the reported growth has not materially changed its importance in the short term.

The recently completed share buyback program, where QUALCOMM repurchased over 19 million shares for nearly US$2.85 billion, stands out as an action that directly returns capital to shareholders. While this capital management move signals some confidence from management, the critical catalyst for shares remains the scaling of automotive and IoT revenue to significantly supplement diminishing handset-related income.

However, unlike past challenges, the loss of a key handset customer is an evolving risk that investors should watch closely as...

Read the full narrative on QUALCOMM (it's free!)

QUALCOMM's outlook anticipates $46.3 billion in revenue and $11.9 billion in earnings by 2028. This scenario is based on a 3.1% annual revenue growth rate and an $0.9 billion earnings increase from $11.0 billion today.

Uncover how QUALCOMM's forecasts yield a $176.20 fair value, a 19% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members set QUALCOMM’s fair value between US$140 and US$300 across 35 estimates. While many see upside in non-handset revenues, the diversity in these views reflects uncertainty around handset market risks.

Explore 35 other fair value estimates on QUALCOMM - why the stock might be worth 6% less than the current price!

Build Your Own QUALCOMM Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your QUALCOMM research is our analysis highlighting 4 key rewards that could impact your investment decision.
• Our free QUALCOMM research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate QUALCOMM's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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