UBS: Qualcomm (QCOM) — Thoughts on Analyst Day, and Answers to Our Questions
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Bernstein reviews Qualcomm's analyst day, where management emphasized a diversification strategy centered on the data center business. Qualcomm guided for data center revenue of $5 billion in FY2027 and $15 billion in FY2029, both above market expectations. The company also raised its FY2029 automotive revenue target to $10 billion, representing a compound annual growth rate of 26% from FY2025. Overall FY2029 revenue guidance reached approximately $65 billion with EPS exceeding $18, up from a prior outlook near $50 billion.
However, the smartphone segment faces meaningful headwinds. Management indicated that Android revenue could be flat to down in FY2027, while Apple revenue will exit entirely, driving a year-over-year decline of $5-6 billion in the mobile business. Additionally, data center products carry gross margins below the corporate chipset average, and operating expenses are expected to rise with two-digit growth in FY2027 due to heavy investment requirements.
Bernstein maintains a Market-Perform rating but raises the target price from $140 to $235, increasing the earnings multiple from 14x to 20x to reflect the evolving business mix. Despite the compelling data center narrative, the firm believes FY2027 EPS may still face downward revisions given smartphone pressures and margin dilution. Data center revenue ramp begins with connectivity in FY2026, followed by custom silicon in FY2027 Q1, AI accelerators in the second half of FY2027, and CPUs in the second half of FY2028. In a downside scenario where data center revenue falls well short of targets, FY2029 EPS could decline to approximately $15.
Key exhibits
Exhibit 1
Exhibit 2
Exhibit 3
Exhibit 4
