Qualcomm's Growth in Auto, IoT, and Data Center Sectors Supports Buy Rating

Susquehanna analyst Christopher Rolland reiterated his Buy rating for Qualcomm, citing the company's strength in the Auto and IoT sectors, strategic partnerships, and expansion into the data center space. Despite some challenges, Qualcomm's guidance for future growth remains positive, driven by AI inference accelerator cards, custom SoCs, and engagement with potential customers. Rolland's rating is supported by better-than-expected gross margins and a positive revenue forecast. Mizuho Securities also maintained a Buy rating with a $185.00 price target.

Qualcomm (NASDAQ: QCOM) reported a solid fiscal third-quarter performance, driven by robust growth in its automotive and IoT businesses. The company's revenue increased by 10% year-on-year to $10.3 billion, with net income of $2.6 billion, up from $2.1 billion [2]. However, the outlook for the fourth quarter was cautious, and concerns over handset market volatility tempered investor enthusiasm, leading to a 7.61% drop in stock price on Thursday [1].

Analysts across Wall Street maintained a cautious optimism. Rosenblatt Securities' Kevin Cassidy maintained a Buy rating and a $225 price forecast, describing the quarter as a "solid beat" [1]. He highlighted Qualcomm's strength in edge AI, backed by its multi-generation NPU roadmap. Bank of America Securities analyst Tal Liani reiterated a Buy with a $200 forecast, emphasizing the company's progress in diversifying beyond smartphones [1]. Mizuho Securities also maintained a Buy rating with a $185.00 price target, supporting the company's strategic partnerships and expansion into the data center space [1].

Despite some challenges, Qualcomm's guidance for future growth remains positive. The company's handset chip business reported $6.3 billion in revenue, up 7%, but below Wall Street expectations [2]. However, revenue from chips used in vehicles increased by 21% to $984 million, and IoT connected-device revenue was up 24% to $1.6 billion [2]. Susquehanna analyst Christopher Rolland reiterated his Buy rating, citing the company's strength in the Auto and IoT sectors, strategic partnerships, and expansion into the data center space [1].

Qualcomm's CEO, Cristiano Amon, highlighted the acquisition of Alphawave as a logical extension of its diversification strategy [2]. The acquisition is expected to close during the early months of 2026 and is aimed at accelerating a roadmap for NPU-based AI inference accelerator cards and custom SoCs for general-purpose and AI head node compute offerings [2]. Qualcomm is in the early stage of its expansion into the data center sector and is engaged with multiple potential customers, including a leading hyperscaler [2].

Looking ahead, Qualcomm is set to unveil its next-gen flagship mobile processor, the Snapdragon 8 Elite 2, during the Snapdragon Summit in late September 2025 [3]. The company is also expected to debut another high-end chipset, SM8845, which will be placed between the Snapdragon 8 Elite 2 and Snapdragon 8s Gen 5 [3].

While Qualcomm faces challenges, such as the expected loss of Apple business and competition from MediaTek, the company's strategic partnerships and expansion into the data center space provide promising growth avenues. Analysts remain optimistic about Qualcomm's long-term prospects, driven by its strong execution and diversification strategy.

References:

[1] https://finance.yahoo.com/news/qualcomms-china-exposure-key-risk-194307341.html
[2] https://www.mobileworldlive.com/qualcomm/qualcomm-ceo-bullish-on-alphawave-driving-new-revenue/
[3] https://technave.com/gadget/Qualcomm-is-reportedly-launching-a-new-high-end-SoC-placed-between-SD-8-Elite-2-and-SD-8s-Gen-5-43590.html