Trading was heavy at over $5.5 billion in volume, one of the busiest days in over a year. Despite Monday’s rally, the stock remains about 12% below its June 2024 peak of $230.63. Investors remain worried about Qualcomm’s heavy reliance on smartphones, which still make up 61% of its chip sales.
Wall Street Remains Cautious
Wall Street analysts are split on Qualcomm’s datacenter strategy. The overall rating is “Moderate Buy” with 7 strong buys, 1 buy, 5 holds, and 1 strong sell across 14 analyst firms.
Wolfe Research kept its neutral rating, pointing out that Qualcomm’s new AI200 and AI250 chips “appear less powerful than current products from Nvidia, AMD, and Broadcom.” The chips use cheaper memory and connection technology, making them budget-friendly options rather than top performers.
Wolfe Research estimates Qualcomm’s deal with HUMAIN (Saudi Arabia’s AI company) will bring in about $1 billion, far less per unit than AMD’s recent $15 billion deal with OpenAI. This price difference highlights doubt about whether Qualcomm can charge premium prices in a market where Nvidia controls 80-90% of sales.
Analysts’ average price target is $178.79, suggesting only 9% growth from current levels. Predictions range from $140 to $270. Tigress Financial’s $270 target shows the optimistic view, while Wells Fargo’s $140 reflects concern about execution risks. Recently, Piper Sandler cut its target to $175 from $190 and UBS lowered it to $165 from $175.
The $22 Billion Pivot
Monday’s stock jump makes more sense when you understand Qualcomm’s bigger problem. The company will lose about $5 billion in yearly sales starting in 2027 when Apple stops buying Qualcomm’s chips and uses its own 5G technology instead. Apple has been 27% of Qualcomm’s total revenue.
This threat explains why Qualcomm is aggressively expanding into cars and smart devices. Management wants to reach $22 billion in non-smartphone sales by 2029, more than double what they make now. The datacenter move takes this plan even further, though Qualcomm’s history here is shaky. They tried entering datacenters in 2017 with the Centriq 2400 chip, but that effort failed within a year due to tough competition.
Sector Doubt Hits Stocks
Qualcomm’s stock swings more than typical tech stocks. The company had 17 up days in the last 30, with an average daily price swing of 2.73%. This reflects how sensitive investors are to earnings reports and competitive news.
Recent trading patterns showed warning signs. On October 24, trading volume dropped to 6 million shares while the price fell, usually a warning sign. But Monday’s announcement reversed this with huge buying from institutional investors. The stock’s beta of 1.42 means it moves more dramatically than the overall market when investor mood shifts.
Saudi Arabia’s AI bet
Qualcomm’s first big datacenter customer is HUMAIN, Saudi Arabia’s government-backed AI company. Announced at the Future Investment Initiative conference in Riyadh, the deal involves deploying 200 megawatts of Qualcomm’s AI200 and AI250 systems starting in 2026.
HUMAIN’s CEO Tareq Amin called the partnership transformational for the region. HUMAIN has already signed $23 billion in deals with major US tech companies including Nvidia, AMD, and Amazon Web Services.
However, this deal reveals a potential challenge. Unlike Amazon or Google building massive AI systems, HUMAIN is a government project with different economics. Qualcomm needs to win contracts with major cloud providers or large companies to prove their chips work beyond government-backed Middle Eastern projects.
What Investors Need to Monitor
Whether Monday’s rally continues depends on what happens over the next 12-24 months. Since the AI200 won’t ship until 2026 and the AI250 comes in 2027, Qualcomm must keep investors excited with progress updates rather than actual sales. Beyond HUMAIN, winning more datacenter customers (especially cloud providers or large enterprises) is critical. If Qualcomm doesn’t announce more deals within six months, it would signal weak demand.
Qualcomm’s stock trades at about 16 times forward earnings with a price-to-growth ratio below 1.0, making it reasonably priced if the diversification plan works. With profit margins near 26%, return on equity above 40%, and $14.3 billion in cash, the company has money to fund its datacenter push. Car chip sales hit $984 million in Q3 2025, up 59% from last year, while smart device sales grew 24% to $1.68 billion.
Investment Outlook
For investors willing to wait 5-7 years, Qualcomm offers interesting upside potential. If the datacenter business succeeds alongside growth in cars and smart devices, the stock could reach $250-300 by 2027-2028 as investors start valuing it like other AI infrastructure companies. But if the datacenter plan fails while Apple stops buying chips, the stock could fall back to the $140-160 range that pessimistic analysts predict.
Qualcomm brings proven AI technology from its Hexagon processors used in phones, but faces competitors with 10+ years of experience and established software that developers already know. Qualcomm’s pitch focuses on lower costs and flexible deployment, attractive for certain uses, but unproven in the market.
The Verdict
Monday’s 11% jump shows the market rewarding Qualcomm for trying bold diversification instead of just accepting declining smartphone sales. However, cautious analyst reactions and widely varying price targets show Wall Street professionals remain skeptical about whether the company can pull this off.
With a Moderate Buy consensus, Wall Street signals: this could work, but don’t bet the farm. For long-term investors, Qualcomm provides access to AI infrastructure growth and automotive technology at a fair price but success depends on what happens over the next 2-3 years.
Whether the stock holds above $185-190 in coming weeks will show if major investors see this as truly transformational or just tactical positioning. For now, Qualcomm has presented a believable plan to reduce smartphone dependence. Whether it delivers actual revenue growth remains the defining question.
Discover more from Being Shivam
Subscribe to get the latest posts sent to your email.