Investigating whether Qualcomm stands as the top semiconductor share to acquire at the moment?
Qualcomm's Q3 Performance and Future Growth
Qualcomm (QCOM) has reported a strong Q3, returning a total of $3.76 billion to shareholders through share repurchases and dividends, and ending the quarter with a cash reserve of $12.3 billion. The company's performance has caught the attention of analysts, who predict moderate to strong growth for QCOM stock over the next 12 months.
The tech giant's growth prospects are driven by its expansion into new markets beyond mobile chip dominance, including automotive, Internet of Things (IoT), PCs, artificial intelligence (AI), and data centers. Qualcomm's leadership in AI-enabled devices, 5G/6G technologies, and autonomous driving partnerships are expected to drive revenue diversification and growth.
One of the key areas of focus for Qualcomm is AI-powered smart glasses. The company's Snapdragon AR1 Gen 1 platform is dominating the market, with support for 19 partner designs, including Meta's AI smart glasses. The Snapdragon X Series, powering devices from major brands like Acer, Lenovo, Microsoft, Dell, and Samsung, is also gaining traction in the PC market. Over 100 Snapdragon X Series designs are planned for commercialization by 2026.
In the automotive sector, Qualcomm's Snapdragon Digital Chassis has won contracts in 12 new designs for fiscal 2025, and 50 vehicle launches are planned for the same period. The company is also focusing on robotics, automation, and humanoid robots with its automotive-grade silicon, sensing, and AI capabilities in the field of Physical AI.
Qualcomm's planned acquisition of Alphawave IP Group is expected to close in the first quarter of 2026, strengthening the company's data center strategy. The company is also in advanced discussions with a major hyperscaler, with potential revenue beginning in fiscal 2028.
Analysts rate QCOM stock a "Moderate Buy," with an average price target of $178.65, implying an upside potential of 21% from current levels. More bullish outlooks predict up to a 38-40% increase over the next 12 months. Wall Street rates QCOM stock with 15 "Strong Buys," 15 "Holds," and one "Strong Sell," with one analyst suggesting a "Moderate Buy."
Despite the positive outlook, some caution is noted due to mixed earnings estimate revisions and competitive pressures in key markets like smartphones, as well as challenges like tariffs and high R&D costs impacting profitability in the near term.
Qualcomm's CEO, Cristiano Amon, forecasts fiscal 2025 to be the second straight year of over 15% year-over-year growth in total QCT non-Apple revenues. The company sees personal AI devices like smart glasses, wearables, and earbuds as a separate growth category from smartphones, with the Snapdragon 8 Elite setting the standard for mobile innovation. Qualcomm anticipates becoming the preferred supplier in the market for personal AI devices due to its strengths in connectivity, low-power AI processing, and sensors.
In conclusion, Qualcomm's strong Q3 performance and strategic diversification efforts position the company for continued growth in the coming years, particularly in AI, automotive tech, and the personal AI device market. However, investors should remain cautious due to near-term uncertainties and competitive pressures.
The strategic expansion of Qualcomm into the AI-powered personal devices market, such as smart glasses and wearables, leveraging cutting-edge technology like the Snapdragon 8 Elite, positions the company to capture a significant market share in the near future. Moreover, the company's growth prospects are augmented by its ventures into data center solutions, as evidenced by the planned acquisition of Alphawave IP Group and advanced discussions with a major hyperscaler.
