It’s been a reality check for many of the chip sector’s recent high-flyers. Semi stocks have been retreating and you can add Qualcomm (NASDAQ:QCOM) to the list of names on the backfoot. Since notching an all-time high in June, the shares have shed 27% of their value.
Of course, in such a situation, savvy investors will be wondering whether an opportunity beckons. But according to Wolfe’s Chris Caso, an analyst ranked in the top 1% of Street stock pros, the bull case for the chip giant is difficult to defend right now.
In fact, Caso recently downgraded his QCOM rating from Outperform (i.e., Buy) to Peer Perform (i.e., Neutral) while also taking his prior $200 price target off the table. (To watch Caso’s track record, click here)
The primary reason behind this downgrade is Qualcomm’s relationship with Apple. Qualcomm supplies 5G modems for Apple’s iPhone, but Apple has long been eager to develop its own modem technology. Although Apple’s previous attempts were unsuccessful, it seems this time might be different. Qualcomm has indicated it will only supply modems for 20% of the iPhone 18 models (set for 2026), but given Apple’s past struggles, some on Wall Street have dismissed this as a ‘boy who cried wolf’ situation.
It’s not, though, according to Caso. “Recent checks suggest the AAPL modem is indeed coming. We now expect a limited impact from AAPL’s modem in iPhone SE in the spring, more impact from iPhone 17, and for AAPL to likely supply modems for all phones outside the US by iPhone 18.”
Meanwhile, at the November analyst day, Caso anticipates QCOM will outline its next phase of “incremental growth” to offset the loss of the iPhone, focusing on AI handsets and IoT. Yet, given how competitive the market is, Caso thinks that will be a “tougher sell.” On the PC side, next year, QCOM will lose their Windows exclusivity, and a number of new entrants are expected to enter the frame.
And while the stock trades at 15x Caso’s FY26 EPS forecast – which isn’t expensive – the “loss of AAPL revenue creates a headwind that’s not fully in estimates with uncertain catalysts elsewhere, making it difficult for us to continue defending the bull case.”
So that’s the Wolfe view, but what does the rest of the Street think? Based on an additional 19 Buys, 8 Holds and 1 Sell, the stock claims a Moderate Buy consensus rating. Going by the $207.60 average price target, a year from now, shares will be changing hands for a 24% premium. (See QCOM stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
