Skyworks Solutions Stock Craters as Apple Content Loss Sparks Downgrades

Skyworks Solutions (NASDAQ: SWKS), a key Apple supplier, saw its stock plunge over 20% following its fiscal Q1 earnings report, as investors reacted to disappointing guidance and a significant content loss in the next-generation iPhone 17. The company reported adjusted earnings per share (EPS) of $1.60, slightly ahead of the $1.57 consensus estimate but down from $1.97 in the prior year. Revenue came in at $1.07 billion, declining 11% year-over-year and in line with analyst expectations. Adjusted gross margin held steady at 46.5%, matching estimates, while R&D expenses surged 15% year-over-year to $176.4 million, exceeding the projected $168.7 million. Despite adjusted operating income rising 4.1% sequentially to $284.8 million, the report failed to inspire confidence as forward-looking metrics painted a bleak picture.

The key driver behind the stock’s sharp decline was management’s disclosure of a 20-25% content reduction in the upcoming iPhone 17, stemming from Apple’s transition to a dual-source strategy for a complex device that Skyworks had previously supplied exclusively. Analysts believe that Broadcom (NASDAQ: AVGO) is now Apple’s second source, eroding Skyworks’ dominant position in the RF space. This shift comes on the heels of an earlier content loss in the iPhone 16, further compounding revenue pressures. While Skyworks had initially viewed the iPhone 17 as a transition cycle before potentially regaining content in the iPhone 18, analysts are increasingly skeptical of any meaningful recovery until Apple shifts more decisively toward internally sourced modems. In the meantime, Skyworks’ revenue and profitability prospects through fiscal 2026 have taken a material hit.

Wall Street swiftly reacted with a wave of downgrades, signaling broad concern about the company’s trajectory. Stifel cut its rating to Hold, citing significant share loss in Apple’s ecosystem and a structurally weaker outlook for Skyworks. Mizuho, RBLT, and B. Riley also downgraded the stock to Neutral, with price targets ranging from $62 to $80. Analysts at KeyBanc noted that while Skyworks' Q1 results were in line with expectations, the broader issue remains the company’s deteriorating position in Apple's supply chain. With little visibility on content recovery and an uncertain path forward under newly appointed CEO Philip Brace, sentiment around the stock has turned increasingly cautious. The broader semiconductor industry is also facing headwinds from an inventory buildup, exacerbated by a slowdown in electric vehicle adoption, further weighing on sentiment.

From a technical perspective, Skyworks' stock has suffered a major breakdown, breaching long-term support at $86 and slicing through its 200-month moving average at $73. With shares now trading at their worst levels since 2019, the technical damage is severe, raising the risk of further downside in the near term. The premarket collapse of nearly 30% suggests that investors are reassessing the company’s earnings power and competitive positioning, with the stock now firmly in a downtrend. While some may view the steep selloff as an opportunity, the lack of near-term catalysts and concerns over declining Apple content make it difficult to call a bottom just yet. With analysts slashing price targets and the company navigating a challenging transition, Skyworks faces an uphill battle in regaining investor confidence.

We do not recommend investors to try and buy this dip as this disruptive earnings gap has further downside.