Qualcomm (NASDAQ:QCOM) posted a solid fiscal third-quarter performance on Wednesday, boosted by continued growth in its automotive and IoT businesses.
However, a cautious fourth-quarter outlook and lingering concerns over handset market volatility tempered investor enthusiasm, sending shares down more than 7% in Thursday trading.
Analysts across Wall Street responded with cautious optimism. Rosenblatt Securities’ Kevin Cassidy, who maintained a Buy rating and a $225 price forecast, described the quarter as a “solid beat”.
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While fourth-quarter projections may not inspire near-term excitement, Cassidy underscored Qualcomm’s strength in edge AI, backed by its multi-generation NPU roadmap. He trimmed his fourth-quarter forecast slightly to $10.65 billion in revenue and $2.85 EPS, and now expects fiscal 2025 revenue of $43.52 billion and EPS of $11.88.
Bank of America Securities analyst Tal Liani also reiterated a Buy with a $200 forecast, emphasizing Qualcomm’s progress in diversifying beyond smartphones.
While handset revenue was marginally below expectations due to mix and timing issues, automotive and IoT gains, up 21.3% and 23.7% respectively, provided an effective offset.
Liani sees handset revenue rebounding in the next quarter, with forward guidance implying aggregate third-quarter and fourth-quarter performance should beat Street expectations. He also pointed to a stronger-than-expected operating margin that contributed to a 5-cent EPS beat.
Liani noted that non-handset revenue now comprises 30% of QCT sales, up from 25% three years ago, and is projected to grow 16% in 2025 and 20% in 2026.
He highlighted strong design momentum in automotive, with 12 digital chassis wins and 50 new vehicle launches this year. IoT, meanwhile, is being propelled by AI PCs and smart glasses adoption.
However, Liani flagged China as a key risk, with the region accounting for 68% of QCT handset revenue. Qualcomm’s expanded relationship with Xiaomi (OTC:XIACF) and leadership in the mid-to-high-end segment provide some insulation, but rising domestic competition, particularly from MediaTek, remains a threat.
He also pointed to Qualcomm’s longer-term ambitions in the data center space as a potential future catalyst. The company, which recently acquired Alphawave, is leveraging its CPU and NPU assets and has entered advanced talks with a major hyperscaler. Though material revenue from this push isn’t expected until 2028, Liani views it as a promising growth avenue.
J.P. Morgan’s Samik Chatterjee echoed these sentiments, reiterating an Overweight rating and a $200 price forecast. He noted that the strength in IoT and automotive helped counteract weaker handset performance.
