QCOM Rides on Strength in Premium Handset Market: Will it Sustain?

Qualcomm Incorporated (QCOM) generated about $6.96 billion in handset revenues in the latest quarter, with a year-over-year increase of 14% and an estimated $27.8 billion in fiscal 2025, contributing roughly 63% of the total company’s revenues. Qualcomm’s strong handset revenues are driven by its increased customer demand for Snapdragon-powered premium Android smartphones.

Qualcomm faces strong competition from rivals like MediaTek, especially in mid-range and budget smartphones, which puts pressure on its market share and pricing. U.S.-China trade tensions have reduced companies' handset demand to a great extent. Qualcomm's handset business experienced ongoing challenges as global smartphone demand slowed down day by day. Moreover, major handset manufacturers, such as Apple and Samsung, are moving toward in-house chip development. This is a major challenge for Qualcomm.

To overcome challenges in the smartphone business, Qualcomm is focusing on premium Snapdragon chips to stay competitive in flagship devices. Qualcomm recently launched the Snapdragon 8 Gen 5, offering high-speed performance, advanced AI, improved graphics, and enhanced camera capabilities for flagship smartphones from global brands like iQOO, Honor, ASUS, OnePlus, and Vivo.

Per a report from Precedence Research, the global 5G chipset market is expected to reach $126.4 billion by 2030 from $18.7 billion in 2022, with a CAGR of 27%, indicating strong underlying growth potential for Qualcomm’s handset segment in the near future. QCOM’s continuous innovation in powering flagship devices with cutting-edge features helps to boost its handset revenues, maintain leadership in the premium segment, and drive future revenue growth.

Other Tech Companies Focused on Handset Chip Development

Qualcomm faces competition from Apple, Inc. (AAPL) and Broadcom, Inc. (AVGO). Apple recently launched the new iPad Pro, MacBook Pro, and upgraded Vision Pro, all powered by their M5 chip. Apple’s iPhone 17 series uses the A19 chip, and the iPhone Air features the A19 Pro chip, both offering faster performance, better graphics, and advanced AI capabilities. These recent chips strengthen Apple’s position in the smartphone market and reduce its reliance on third-party suppliers.

Broadcom recently launched Wi Fi 8 chips for smartphones and connected devices, improving speed, reliability, and efficiency. Broadcom, by providing essential smartphone components like Wi Fi, Bluetooth, and RF chips for major brands, remains important in the handset market. The company also focuses on affordable LTE chips for emerging markets, helping OEMs bring affordable smartphones to countries like India.

QCOM’s Price Performance, Valuation and Estimates

Qualcomm shares have gained 11.1% over the past year compared with the industry’s growth of 35.3%.

Going by the price/earnings ratio, the company's shares currently trade at 14.26 forward earnings, lower than 34.54 for the industry.

Earnings estimates for 2025 have increased 2% to $12.15 over the past 60 days, while those for 2026 have risen 3.4% to $12.60.

Qualcomm stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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