QUALCOMM Incorporated (QCOM): A Bear Case Theory

We came across a bearish thesis on QUALCOMM Incorporated on Irrational Analysis’s Substack. In this article, we will summarize the bulls’ thesis on QCOM. QUALCOMM Incorporated's share was trading at $169.20 as of September 26th. QCOM’s trailing and forward P/E were 16.33 and 13.99 respectively according to Yahoo Finance.

Irrational Analysis highlights Qualcomm’s chronic underperformance in the semiconductor sector, driven by strategic missteps and missed opportunities over the past decade. While Qualcomm historically dominated mobile chipsets and licensing, its diversification efforts outside handsets have largely failed. Ventures into Cloud AI inference, laptop SoCs, RF front-end, 5G O-RAN, XR/AR/VR, and datacenter CPUs either underdelivered or were abandoned, with the company repeatedly delaying execution and losing ground to competitors like Intel, Nvidia, Broadcom, AMD, and MediaTek.

The automotive segment stands out as a rare success, rapidly scaling revenue and surpassing Nvidia in quarterly automotive revenue, yet it remains a low-margin, regionally concentrated business. Qualcomm’s attempts to leverage its QTL patent portfolio into new markets, including always-connected PCs, edge AI, and IoT, have largely failed to generate meaningful economic value.

Compounding these issues, Qualcomm faces a structural challenge from Apple, which has successfully launched its internal C1/C1X modem in the iPhone 16e and iPhone Air, capturing a growing share of iPhone volumes. The forthcoming expiration of the Qualcomm-Apple licensing agreement in April 2027 threatens a significant revenue cliff, particularly as Apple achieves near-global deployment of its modem and carriers like Verizon complete C-band rollouts, reducing reliance on Qualcomm technology. .

Qualcomm’s current reporting obscures visibility into critical non-handset and cloud initiatives, making it difficult to assess true revenue potential. Overall, Qualcomm is increasingly constrained by strategic overreach, delayed diversification, and competitive pressures, leaving it out of step with the high-growth AI infrastructure and datacenter computing markets. With limited exposure to lucrative emerging trends and a looming Apple-related revenue decline, Qualcomm’s ability to deliver meaningful shareholder returns appears severely challenged, underscoring the urgency for corrective action before the impending revenue disruption in 2027.

Previously we covered a bullish thesis on QUALCOMM Incorporated by Christopher Kirincic in May 2025, which highlighted the company’s diversification into automotive, AI edge computing, and IoT, supported by steady licensing revenue. The company's stock price has appreciated approximately 11% since our coverage. This is because the thesis partially played out. Irrational Analysis shares a contrarian view but emphasizes strategic missteps and looming Apple-related revenue risks.

QUALCOMM Incorporated is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 76 hedge fund portfolios held QCOM at the end of the second quarter which was 82 in the previous quarter. While we acknowledge the potential of QCOM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.