Bernstein has raised Qualcomm’s price target to 235 dollars from 140 dollars, while maintaining a Market Perform rating, reflecting stronger long-term growth expectations tied to data center, automotive, and IoT expansion. The upgrade follows the company’s 2026 Investor Day, where Qualcomm outlined a larger push into AI infrastructure and projected non-handset revenue reaching about 40 billion dollars by fiscal 2029.
Long-term growth lifts valuation
The new target is based on a higher valuation framework, with Bernstein lifting Qualcomm’s price-to-earnings multiple from 14 to 20. This shift reflects expectations that the company will evolve into a more diversified business, driven increasingly by AI and data center opportunities rather than smartphones.
Central to this outlook is Qualcomm’s data center segment, which Bernstein estimates could generate more than 15 billion dollars in revenue by 2029. The company is developing custom ASIC chips and its Dragonfly C1000 CPU, with two unnamed cloud clients expected to each contribute over 1 billion dollars in custom silicon revenue by fiscal 2027. A multi-generation CPU agreement with Meta Platforms, announced at Investor Day, further supports this strategy, with shipments set to begin in the second half of 2028.
Diversification beyond smartphones
Automotive and IoT businesses are expected to provide additional growth. Qualcomm’s automotive design pipeline has expanded to 65 billion dollars from 45 billion, with revenue targets of around 10 billion dollars for automotive and more than 14 billion dollars for IoT by 2029.
This diversification comes as the broader data center market grows rapidly, projected to expand from 308.46 billion dollars in 2024 to 646.16 billion dollars by 2030, positioning Qualcomm to capture a share of AI-driven infrastructure demand.
Near-term pressures remain
Despite the stronger long-term narrative, near-term challenges persist. Bernstein expects smartphone revenue, particularly from Android devices, to remain flat or decline slightly through 2027. The loss of Apple’s modem business could further reduce handset revenue by 5 to 6 billion dollars. Between 2026 and 2029, Android handset revenue is forecast to grow at a modest 5 percent annually.
At the same time, operating expenses are expected to rise sharply, with double-digit increases projected for 2027 as Qualcomm ramps investment in AI and data center initiatives. Because revenue from these projects will materialize later, earnings per share could face downward revisions in the interim.
Margin pressure is another concern. Data center margins are estimated near 40 percent, below Qualcomm’s corporate average, which could pull overall gross margins down from 55.2 percent in fiscal 2026 to 51.6 percent by 2029.
Execution remains key risk
Bernstein estimates that even if data center revenue falls short of the 15 billion dollar target, Qualcomm could still reach about 15 dollars in earnings per share by 2029, supported by automotive, IoT, and licensing. The firm’s valuation assumes average EPS of roughly 11.75 dollars across fiscal 2027 and 2028.
However, achieving 18 dollars or more in EPS by 2029 will depend on consistent client demand, stable margins, and the company’s ability to offset declines in its handset business.
A “show-me” story for traders
Across the broader market, analysts have taken a similar stance, raising price targets while keeping neutral ratings. The company’s transformation into an AI infrastructure player is widely seen as promising but unproven, with several analysts describing the strategy as a “show-me story.”
For traders, the period ahead is likely to hinge on execution. Key milestones include securing over 1 billion dollars in revenue from major cloud customers and delivering on announced partnerships. Until tangible financial results emerge, sentiment may remain volatile, reacting to incremental developments in Qualcomm’s long-term pivot toward AI-driven growth.
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