JPMorgan Downgrades Qualcomm to Neutral

JPMorgan analyst Samik Chatterjee downgraded Qualcomm (NASDAQ: QCOM) from Overweight to Neutral with a price target of $140.00 (from $185.00).

“We are downgrading shares of Qualcomm to Neutral from Overweight as we believe incremental execution proof points are more critical to keep confidence in the widely anticipated datacenter opportunity following an increase in competitive intensity.

Qualcomm’s long-term diversification strategy beyond smartphones has been part of our Overweight thesis on the shares through periods of macro and company- specific volatility in revenue drivers.

In relation to the datacenter CPU and NPU opportunity within Datacenters, succesful execution could drive an inflection in non-smartphone revenues and deliver diversification ahead of its planned roadmap; but while the company is still working on its roadmap with customers in building pipeline of opportunities across both datacenter CPUs and NPUs, recent announcements from Arm and Nvidia focused on Datacenter CPUs as well as chipsets to address inference use cases are increasing the competitive intensity and driving us to look more for execution datapoints from Qualcomm which we expect will take time to emerge.

Arm recently outlined the opportunity solely focused on datacenter CPUs at $100 bn+, and we expect it to present a competitive risk to Qualcomm via offering Arm-based CPU solutions.

Similarly, Nvidia’s recent announcement at GTC relative to Groq 3 LPX chips to address the inference market will increase alternatives for customers looking to disaggregate decode and pre-fill, necessitating strong execution from Qualcomm to get credit for the opportunity in relation to the valuation multiple that investors are willing to ascribe to the shares.

Beyond the long-term drivers, the near-term drivers are also murky, driven by a multitude of concerns across Handset business, including a low double-digit decline in smartphone shipments in 2026, which in our view is not fully reflected in consensus QTL revenue forecasts (consensus of -4% y/y in CY26) as well as QCT Handsets revenue forecast (JPMe of -22% vs. consensus of -17% in 2026 -including headwinds from Apple and Samsung), along with downside risk to forecasts across IoT and Automotive, driven by broader macro-economic concerns.

We are modestly trimming our revenue forecast for QTL and QCT IoT business, driving modest low-single reduction to our out year EPS forecast.

We are lowering our Dec-26 price target to $140 (vs. $185 prior) based on valuing our updated FY27 EPS estimate on a 13x target P/E multiple (vs.

16x prior and largely in line with current trading multiple) due to slow diversification progress and lack of near-term catalysts for the stock to re-rate.”

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