Why Qualcomm's Future Is Bright Despite Apple's Exit: A Diversified Play for Growth

The market's anxiety over Apple's impending shift to in-house modems has sent Qualcomm's stock reeling. But a closer look reveals a narrative far more nuanced—and bullish—than the headlines suggest. Qualcomm's aggressive pivot to high-growth automotive and IoT markets positions it to not only weather Apple's departure but to thrive in the coming decade. Let's dissect the data.

The Apple Exit: A Speed Bump, Not a Detour

Apple's plan to fully transition away from Qualcomm by 2028 will cost the chipmaker up to $7.8 billion annually in lost revenue. Yet investors are overlooking a critical detail: Qualcomm has already begun replacing this income with automotive and IoT growth, which are set to generate over $13 billion in additional revenue by 2028—more than offsetting Apple's exit.

Automotive & IoT: The Growth Engine

Qualcomm's automotive revenue is soaring at a 28.1% CAGR, with FY2024 sales hitting $959 million—a 59% jump from the prior year. By 2030, automotive revenue is projected to hit $22 billion, driven by advanced driver-assistance systems (ADAS), connected infotainment, and 5G-enabled vehicles.

In parallel, the IoT segment is expanding at 26.6% annually, with FY2025 Q2 revenue surging 27% year-over-year to $1.58 billion. This segment is being fueled by the shift from basic microcontrollers to AI-driven microprocessors in industries like manufacturing and healthcare. Combined, automotive and IoT will account for 50% of Qualcomm's total revenue by 2030, up from 25% in 2024.

Apple's Modem Timeline: A Delayed Threat

Apple's C1 modem, now in limited use, won't fully displace Qualcomm until 2027–2028. Even then, the transition is gradual:
- 2025–2026: Qualcomm continues supplying modems under existing agreements.
- 2027: Apple's licensing deal with Qualcomm expires, marking the start of its full transition.
- 2028: The $7.8 billion revenue loss materializes—but by then, Qualcomm's automotive and IoT divisions will be in full swing.

Crucially, Apple's in-house modems still lag Qualcomm's X85 5G/6G platform, which offers superior speed, latency, and power efficiency. Analysts estimate Apple's modem team remains 2–3 years behind in 6G readiness, ensuring Qualcomm's dominance in the Android ecosystem.

Why the Market Overreacts—And Why You Should Buy Now

Qualcomm's stock has been pummeled on Apple exit fears, trading at just 15x forward earnings—a stark contrast to its 5-year average of 20x. This discount ignores two key facts:
1. Licensing Safety Net: Qualcomm's foundational patent licensing business (royalties from Android phone makers) remains intact. Even post-2028, licensing will provide stable cash flows.
2. Undervalued Growth: At current prices, investors are paying a 40% discount to Qualcomm's 2030 automotive/IoT revenue targets.

The Bottom Line: A Buy at These Levels

The market is pricing in Apple's exit as a death knell, but Qualcomm's diversified strategy and technical leadership paint a far brighter picture. By 2028, the company's automotive and IoT divisions will not only replace Apple's revenue but push Qualcomm into a new era of growth.

Investors who act now can lock in a stock trading at a multi-year low—despite its fortress balance sheet, $10 billion in annual FCF, and a clear path to $50 billion in total revenue by 2030. This is a rare opportunity to buy a tech giant at a 50% discount to its growth potential.

Action to Take: Buy Qualcomm (QCOM) now. Set a target of $200+ by 2026 as its automotive and IoT bets crystallize—and brace for a rebound when the market finally catches on.

Data as of May 26, 2025. Past performance is not indicative of future results.