Qualcomm stock rises 2.65% as analysts cut targets on margin risks
- Qualcomm stock rose 2.65% to $168.74, outperforming Nasdaq and S&P 500 declines
- BofA and Rosenblatt maintained Buy ratings but cut price targets to $180 and $235 respectively
- Analysts cite margin pressure from rising input costs, IoT weakness, and lower-margin ASIC sales
- Two hyperscaler ASIC programs expected to generate revenue in the December quarter
*this image is generated using AI for illustrative purposes only.
Qualcomm Inc (NASDAQ: QCOM) shares rose 2.65% to $168.74 on Monday, outperforming broader market declines. The Nasdaq Composite fell 0.26% while the S&P 500 dropped 0.44%, highlighting investor confidence in the chipmaker’s data center prospects despite near-term earnings headwinds.
Analyst Ratings Adjusted
BofA Securities analyst Vivek Arya maintained a Buy rating but lowered his price target to $180. Arya cited higher input costs and fixed mobile pricing as key pressures. He noted that two hyperscaler ASIC programs are expected to begin generating revenue in the December quarter, though he warned that faster-than-expected declines in Apple Inc (NASDAQ: AAPL)-related revenue could weigh on fiscal 2027 earnings.
Rosenblatt Securities analyst Sajal Dogra also maintained a Buy rating, cutting his price target to $235. Dogra described the latest quarter as a meaningful reset, noting that rising manufacturing costs and consumer weakness in the Internet of Things (IoT) sector pose risks.
What the Numbers Show
Both analysts highlight a divergence between long-term growth potential and near-term profitability. While data center opportunities remain promising, the transition to lower-margin custom ASIC revenue and rising manufacturing costs suggests margin compression may persist for several quarters. This indicates that revenue growth from new segments may not immediately translate to proportional profit expansion.
ETF Exposure
Qualcomm holds significant weight in major semiconductor and dividend-focused ETFs, meaning fund flows will likely drive automatic trading activity.
| ETF Name | Ticker | Weight |
|---|---|---|
| First Trust Nasdaq Semiconductor ETF | FTXL | 5.93% |
| Horizon Dividend Income ETF | DIVN | 3.54% |
How might the transition to lower-margin custom ASIC revenue impact Qualcomm's overall profit margins over the next two fiscal years?
What specific strategies is Qualcomm employing to mitigate the risk of faster-than-expected declines in Apple-related revenue for fiscal 2027?
Could rising manufacturing costs and IoT consumer weakness signal a broader slowdown in the semiconductor sector beyond just Qualcomm?
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