Qualcomm downgraded as Apple split and licensing woes loom

Investing.com - President Capital Management downgraded Qualcomm Incorporated (NASDAQ:QCOM) stock, citing mounting challenges, including regulatory risks, Apple’s shift to self-developed 4G/5G modem chips, a slowdown in its licensing (QTL) business, and weakness in the AI PC segment.

Apple’s move to in-house modem chips is poised to significantly erode Qualcomm’s profits in the coming years, the note said. With Apple (NASDAQ:AAPL) historically representing a substantial share of Qualcomm’s revenue, the impact is expected to grow as the tech giant further reduces its reliance on third-party suppliers.

Though Qualcomm is working to diversify its revenue streams as it prepares for the end of its lucrative partnership with Apple.

The company’s QTL licensing business, however, is also showing signs of slowing. While the high-end smartphone market remains robust, future licensing gains are increasingly dependent on growth in the automotive and IoT sectors.

Despite these challenges, Qualcomm’s stock has risen about 14% this year. It was trading at $165 on Tuesday trading. The San Diego-based company remains the largest supplier of smartphone chips, benefiting from a recovery in the smartphone market as consumers upgrade devices for artificial intelligence applications like chatbots and image generators.

Earlier this month, Qualcomm set its fiscal first-quarter revenue target at $10.9 billion, with projected earnings per share of $2.95. The period includes the holiday shopping season in key markets such as the U.S. and Europe, signaling optimism about near-term demand despite looming headwinds.