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Wolfe Research Downgrades Qualcomm Amid Concerns Over Apple’s Internal Modem Impact


Wolfe Research downgraded Qualcomm (NASDAQ:QCOM) to Peer Perform from Outperform, expressing growing concerns about the potential impact of Apple’s development of its own internal modem on Qualcomm’s future revenue streams. The downgrade also involved removing the price target for Qualcomm’s stock, reflecting the increasing uncertainty surrounding the company’s outlook.
Initially, Qualcomm had downplayed the threat posed by Apple’s internal modem project, leading many in the market to adopt a skeptical stance. Wolfe Research acknowledges that Apple’s efforts to create its own modem have been an ongoing challenge, often dismissed as unlikely to materialize. However, new information suggests that Apple’s modem development is now on track to enter the market, which could pose a significant threat to Qualcomm’s core business.
Wolfe Research pointed out that Qualcomm had previously expected to supply modems for only 20% of the iPhone 18 models, a forecast that now appears overly optimistic. The analysts now foresee a more substantial impact, starting with the iPhone SE expected in the spring, followed by a more extensive rollout with the iPhone 17. By the time the iPhone 18 launches, Apple’s modem could be in nearly all of its phones outside the U.S., significantly diminishing Qualcomm’s market share.
The firm has adjusted its revenue and earnings projections to account for this shift, estimating that Qualcomm could see a $4 billion revenue decline and a $1.50 drop in earnings per share between 2024 and 2026 as a result of losing Apple’s business.
While Qualcomm has been working to diversify its portfolio, focusing on areas like AI handsets and the Internet of Things (IoT), Wolfe Research remains skeptical about the potential for these segments to offset the anticipated loss. The analysts suggest that these new ventures may prove to be a tougher sell to investors, especially in light of the looming challenges.
Wolfe Research concludes that, despite Qualcomm’s relatively attractive valuation at 15 times 2026 EPS, the loss of revenue from Apple and the uncertain prospects for future growth make it difficult to maintain a positive outlook on the stock.

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