Qualcomm Inc. (NASDAQ:QCOM) is positioned to deliver a potentially strong fiscal first quarter for 2026, benefiting prominently from the continued strength of Apple Inc. (NASDAQ:AAPL). However, broader concerns loom as anticipated softness in the smartphone market and escalating operating costs, particularly from recent acquisitions, are expected to challenge the company’s performance in the near term. These contrasting dynamics have prompted a reassessment of Qualcomm's financial outlook by analysts.
A recent research note from JPMorgan Securities, led by analyst Samik Chatterjee, outlines a cautious stance on Qualcomm's near-term prospects. The firm has adjusted its price target down to $195 from a previous $210, while maintaining an Overweight rating on the stock. This adjustment reflects heightened concerns over the evolving smartphone industry dynamics, which are exerting pressure on Qualcomm's licensing revenue streams, as well as increased operating expenses arising from the integration of recent acquisitions including Alphawave, Ventana, and Augentix.
Regarding earnings expectations, JPMorgan has lowered its forecasts for Qualcomm’s fiscal years 2026 and 2027. The fiscal 2026 earnings per share (EPS) projection has been trimmed from $11.80 to $11.50, while the 2027 estimate has been reduced from $12.80 to $12.15. Revenue forecasts are similarly adjusted, albeit reflecting expected fluctuations through the fiscal quarters. The firm anticipates Qualcomm's fiscal first-quarter revenue to reach approximately $12.6 billion, outperforming the consensus estimate of $12.2 billion. This anticipated upside is primarily attributed to seasonal strength in Apple’s product volumes and Qualcomm's enhanced market share with the iPhone maker.
However, signs of caution emerge for the fiscal second quarter of 2026. JPMorgan anticipates revenue to soften to $10.8 billion, below the consensus forecast of $11.2 billion. The EPS for this quarter is projected at $2.66 compared to a consensus of $2.90. The forecasted decline is partially driven by the compounded effect of higher operational costs and margin pressures linked to acquisition-related expenses and increased investments in research and development, especially within Qualcomm's datacenter business.
One key concern outlined in the analysis relates to potential headwinds faced within Qualcomm’s handset revenues and licensing business. Android original equipment manufacturers (OEMs) are currently grappling with rising memory costs, which could consequentially impact Qualcomm’s licensing revenues starting in the March quarter. Specifically, Qualcomm Technology Licensing revenues for the fiscal second quarter of 2026 are projected at $1.29 billion, slightly below the consensus estimate of $1.35 billion.
Despite these downward revisions, Qualcomm's valuation metrics remain compelling from JPMorgan's perspective. The updated price target of $195 suggests a substantial 29% upside from current stock prices. This bullish outlook is supported by a relatively inexpensive valuation multiple of approximately 13 times the next twelve months' earnings and anticipated growth opportunities in artificial intelligence inferencing applications for datacenters.
JPMorgan's Overweight rating reflects confidence in Qualcomm's strategic transition away from its historically smartphone-centric revenue base toward expanding markets in personal computers (PCs), Internet of Things (IoT), and automotive sectors. These areas are forecasted to become increasingly significant contributors to Qualcomm's revenue mix by the end of the decade. Although Apple’s recent move to insource modem technology poses a near-term challenge, analysts believe Qualcomm’s leadership in edge artificial intelligence and edge computing technologies positions the company well to offset such setbacks and supports a potential re-rating of its stock valuation over time.
On the market front, Qualcomm's shares showed modest gains, rising 1.01% to $153.12 at the time of reporting on Monday, reflecting a measured investor response amid these nuanced outlooks.
Key Points
- Qualcomm is expected to report strong fiscal Q1 2026 revenue and earnings, primarily due to robust Apple iPhone demand.
- JPMorgan lowered the fiscal 2026 and 2027 earnings per share forecasts, citing industry dynamics and increased operating expenses.
- Acquisition-related costs and elevated R&D investments in the datacenter segment are pressuring margins and EPS, especially in Q2 fiscal 2026.
- Despite forecast cuts, Qualcomm’s valuation remains attractive with potential growth in AI and non-smartphone markets driving long-term optimism.
Risks and Uncertainties
- Softer demand in the smartphone market could adversely affect Qualcomm’s licensing revenues and overall handset-related business.
- Rising memory costs faced by Android OEMs may weigh on handset revenues starting in the March quarter, impacting Qualcomm's performance.
- Increased operating expenses from recent acquisitions and elevated research and development outlays pose margin pressures.
- Apple's strategy to insource modem technology creates a near-term revenue headwind for Qualcomm.