Susquehanna Lowers Qualcomm Price Target to $165

Susquehanna analyst Christopher Rolland lowered the price target on Qualcomm (NASDAQ: QCOM) to $165 (from $185) while maintaining a Neutral rating.

“Qualcomm posted better results and guidance driven primarily by strength in Automotive and the initial DC ramp.

Specifically for QCT Handsets, management highlighted continued memory-related pressure on smartphone demand.

That said, management commentary around Android was more constructive. For Samsung, CEO Amon now expects their share in the Galaxy S27 to be >70% (vs. previous guidance of ~70% share).

Furthermore, management expects China Android to grow in December.

Regarding Apple, management provided no update to its prior expectation for iPhone 18 modem share to be “materially lower” than 20%.

However, we continue to model Apple revenue of ~$1.6B in FY27.

For total QCT handset, management guided 4Q to be down MSD % QOQ as sequential Android growth is expected to be more than offset by the continued ramp-down in Apple modem revenue.

For AI DC, the company’s $5B FY27 revenue target as its two custom ASIC engagements remain on track with hyperscale customers.

Additionally, DC revenue is expected to reach > $650M in the December quarter, above our prior estimate of $600M.

Regarding customers, management highlighted custom accelerator shipments beginning for AWS in October, with optical connectivity ramping in November.

Additionally, Qualcomm’s HBC technology continues to generate customer interest, with management highlighting two new major prospects added during the quarter.

On server CPU, management highlighted a “large” prospective CPU customer that could provide upside to its $15B FY29 DC target.

Moving to IoT, results were slightly better than our expectations as momentum in Industrial, networking and robotics offset weakness in consumer.

Auto results were ~$210M better than expected, driven primarily by design wins ramping into production. Looking forward, management guided both Auto and IoT to be flat in 4Q.

Beyond the top line, June GMs were -150 bps worse than our expectations driven by near-term pressure from elevated input costs.

Moreover, lower-margin AI Data Center ASIC revenue is expected to create an incremental gross margin headwind as the business scales.

In conclusion, mobile remains challenged as continued Apple share losses offset improving Android trends.

While the long-term AI Data Center opportunity remains intact, the mix shift toward lower-margin custom ASIC revenue is expected to cap gross margin expansion.

We reiterate our Neutral rating but lower our PT from $185 to $165 (~34x C2027E EV/NOPAT).”

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