Qualcomm’s Strategic Pivot: Data Center, Automotive, and IoT Drive Long-Term Growth
Qualcomm (QCOM) has released ambitious financial projections for its non-handset business segments, forecasting significant revenue expansion in data center, automotive, and Internet of Things (IoT) markets through fiscal 2029. However, the company also faces near-term headwinds, including potential revenue loss from Apple’s transition away from Qualcomm modems and AI-driven memory supply constraints.
Financial Projections
Qualcomm’s data center revenue is forecasted to reach $5 billion in fiscal 2027 and $15 billion in fiscal 2029, according to the company’s investor event. The company raised its total non-handset revenue target for fiscal 2029 to $40 billion, comprising:
- Over $15 billion from data center
- $10 billion from automotive
- Over $14 billion from IoT
Analyst estimates for total company revenue in fiscal 2025 are approximately $44 billion, with fiscal 2026 consensus at roughly $42.5 billion. This projected decline is attributed to memory shortages and the expected transition of Apple to its own modem technology.
"Qualcomm’s data center revenue is forecasted to reach $5 billion in fiscal 2027 and $15 billion in fiscal 2029."
Customer and Revenue Diversification
Morningstar identified two hyperscale customers that may each contribute over $1 billion in data center revenue to Qualcomm in fiscal 2027—potentially Microsoft and Google. Meta's server CPU deal is not expected to ramp until the second half of fiscal 2028.
Qualcomm expects its modem share within Apple's iPhone 18 series to fall to 20% in fiscal 2027, reducing Apple chip revenue from over $6 billion to approximately $2 billion. Apple’s gradual transition away from Qualcomm modems represents a risk of roughly $7 billion in annual revenue.
Qualcomm’s automotive business has a $45 billion design-win pipeline.
Technology Positioning
Qualcomm is positioning its technology for the anticipated shift toward edge computing, where AI inference occurs locally on devices rather than in centralized data centers. Company platforms include:
- Snapdragon processors for smartphones, PCs, and vehicles
- Dragonwing and Arduino platforms for robotics and industrial applications
The company operates with operating cash flow margins above 30%.
"Qualcomm is positioning its technology for the anticipated shift toward edge computing."
Analyst Commentary
Morningstar increased Qualcomm’s fair value estimate from $155 to $200 following the company’s data center investor event. Morningstar stated that Qualcomm’s AI initiatives are gaining adoption with leading customers ahead of expectations, but noted that Qualcomm is not expected to displace Nvidia’s leadership in AI computing.
Market Performance
Qualcomm stock rose approximately 40% over the month prior to the current reporting period. Over the past year, the stock has increased 34%. In the current month, shares declined 18%, on track for its worst monthly performance since April 2019. Shares were down 2% in overnight trading ahead of Friday’s session.
Retail sentiment on Stocktwits was classified as "bullish" with "high" message volume.
Forward-Looking Projections
Analysts have modeled a scenario in which Qualcomm revenue grows 15% annually driven by AI, CPU chips, and automotive, reaching $65 billion by fiscal 2029. Under that scenario:
- Assumed net margins of approximately 25%
- Share count declining from roughly 1.07 billion to 950 million through repurchases
- Earnings per share could reach approximately $17
- At a 20x forward earnings multiple, this would imply a share price of $340
"Under a 15% annual growth scenario, earnings per share could reach approximately $17, implying a share price of $340."