Qualcomm stock (QCOM) fell as much as 6% on Wednesday, a day after the corporate provided latest financial targets for its non-smartphone business at its first investor day in three years.
Qualcomm, which gets the vast majority of its revenue from designing and licensing handset chips, has been expanding into semiconductors that go into cars, personal computers, and other devices.
The corporate now expects those businesses to generate a combined $22 billion in sales by 2029.
Sales of $8 billion will come from Qualcomm’s automotive segment, where it already has partnerships with the likes of BMW to extend computing functionality in vehicles and push toward more autonomous driving.
Qualcomm forecast that $14 billion will come from its Web of Things segment, which incorporates prolonged reality devices and industrial functions. It also includes PCs, expected to account for $4 billion. The corporate’s Snapdragon X Elite chips power Microsoft’s latest-generation Surface laptops, which feature the GenAI Copilot assistant.
“Everybody that buys an X Elite is amazingly blissful with it,” Qualcomm CEO Cristiano Amon said in an interview following the investor day in Latest York. “From all of our OEMs [original equipment manufacturers] and Microsoft, the present response is exceeding everybody’s expectation.”
Amon called the $4 billion goal for the PC business “high confidence.”
Some analysts, nevertheless, said the road there will not be smooth.
“While management is optimistic about AI PC opportunities, Windows-on-ARM skepticism and intense competition (from each x86 and ARM SoC suppliers) could limit QCOM’s opportunity,” Raymond James’ Srini Pajjuri wrote in a note to clients. He has a Hold-equivalent Market Perform rating on the stock.
Bank of America’s Tal Liani rates Qualcomm a Buy and “got here away incrementally positive on Qualcomm’s long-term positioning and the diversification outside of handsets.”
But Liani identified that not only is the corporate entering markets with emerging tech, but it surely also must grab market share.
“These markets must develop to support Qualcomm’s long-term targets, of which the pace and magnitude [are] uncertain,” he wrote.
Qualcomm’s biggest business stays smartphones, and its ramped-up diversification comes as Apple (AAPL) is working on migrating away from Qualcomm modems. As for the Android-based business, Amon said he’s projecting mid-single-digit growth, what he calls a “conservative assumption.”
Meaning the corporate expects to finish the last decade with revenue about evenly split between handsets at 50% and autos and Web of Things combined at the opposite 50%.
