Do Qualcomm’s (QCOM) AI shift and EPS surge suggest a new core business model?

• In the second quarter of fiscal 2026, Qualcomm reported revenue of US$10.599 billion, down slightly from the same period last year, but net income more than doubled to US$7.37 billion, and underlying profit from continuing operations increased to US$6.92.
• In addition to improved profitability, Qualcomm’s recent results highlight an increased focus on AI-enabled products, custom silicon in data centers, automotive chips, and large-scale stock buybacks, indicating a gradual shift in business mix away from its traditional mobile phone core.
• Here, we examine how Qualcomm’s expansion into AI-native smartphones and data center chips changes the existing investment story.

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Qualcomm Investment Story Summary

To own Qualcomm today, you need to believe that the company’s shift from handset-focused revenues to AI-focused chips and automotive and data center silicon will be enough to offset smartphone pressures, regulatory and geopolitical risks. While the latest quarter’s profit surge and US$20 billion share buybacks support near-term sentiment, the key near-term drivers remain the execution of AI data centers and AI-native devices, and the biggest risk is that these diversification bets do not scale commercially as expected.

In that context, confirmation that Qualcomm plans to start shipping custom data center chips to major hyperscalers this year seems particularly important. Because it directly ties the recent AI enthusiasm and Alphawave acquisition to tangible customer growth. Weak device revenue and supply constraints are a reminder of how dependent the company’s business remains on cyclical smartphone demand, yet linking its current profitability to one of the key potential growth drivers analysts are watching.

But behind the optimism about AI and stock buybacks, investors need to realize how quickly competition and customer insourcing could reshape Qualcomm’s core revenue base…

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Qualcomm’s plans project revenue of $48.8 billion and revenue of $11 billion by 2029. This would require annual revenue growth of 3.1%, increasing revenue by approximately $1.1 billion from the current $9.9 billion.

We reveal how Qualcomm’s projections yield a fair value of $168.50, 17% below the current price.

explore other perspectives

Some of the most optimistic analysts already expect Qualcomm to reach revenues of about US$49.7 billion and profits of about US$14.3 billion by 2029, and contrary to consensus, they rely heavily on accelerating growth in automotive and IoT to justify that view. When comparing these assumptions to today’s AI data center headlines, it’s worth asking whether this new momentum reinforces that bullish scenario or reveals how much further we still have to go in the right direction.

Check out the other 22 fair value estimates for Qualcomm – Find out why the stock is worth 33% less than its current price.

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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

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