HSBC raises Qualcomm stock price target to $155 on AI prospects

HSBC raised Qualcomm’s price target to $155 from $150 but kept a Hold rating, implying about 1% downside from the current $156 share price. The firm trimmed fiscal 2026 and 2027 EPS estimates by 5% and 9% on handset weakness and said it is too early to quantify upside from Qualcomm’s AI datacenter and custom silicon initiatives. Qualcomm recently reported fiscal Q2 2026 EPS of $2.65 versus $2.55 expected and revenue of $10.6 billion versus $10.58 billion, while continuing a 23-year dividend growth streak.

Analysis

The market is still treating QCOM like a handset beta with an AI call option, but the near-term setup is more about multiple compression than revenue acceleration. If management cannot convert the hyperscaler/custom-silicon narrative into named design wins by the June investor day, the market will likely re-rate the AI optionality as “powerpoint risk” and focus on the more mature handset cycle, where estimates still look vulnerable over the next 1-2 quarters. That makes the next catalyst less about upside surprise and more about whether the stock can defend a premium valuation while growth visibility stays cloudy.

Second-order, the most important competitive issue is not NVIDIA but the adjacent ASIC ecosystem: if Qualcomm is truly leaning on Alphawave IP or a similar partnership structure, the economic moat is narrower than bulls assume and the margin pool may be shared with foundry and IP partners. In that case, any AI datacenter contribution could be strategically meaningful but financially dilute at first, especially if it requires customer-specific engineering and low initial volume. The bigger winner may be external IP and packaging vendors rather than QCOM’s standalone mix, while handset weakness continues to offset the operating leverage investors want from AI.

The contrarian read is that consensus is probably underestimating how little evidence is needed to support the stock here. QCOM does not need a massive AI revenue line to stabilize sentiment; it needs one credible hyperscaler engagement and proof that auto/IoT can cushion handset cyclicality. But with the shares trading near the implied takeout of the bullish case, the risk/reward is asymmetric to the downside unless management can show a faster conversion curve than a 2026–2027 revenue event horizon.

Key Decisions for Investors

• Avoid adding outright long QCOM before the June investor day; upside is capped near term unless management names customers or quantifies AI revenue, while downside could be 8-12% if guidance or handset commentary softens.
• For existing longs, consider a covered-call overlay into the investor day (e.g., 1-2 month calls slightly above spot) to monetize elevated implied volatility while preserving core exposure to any positive AI surprise.
• Pair trade: long AVGO / short QCOM over the next 1-3 months. AVGO has clearer ASIC monetization and a stronger track record of converting custom silicon into earnings power; QCOM is still in the proof-of-concept phase.
• If you want to express skepticism tactically, use a QCOM put spread 1-3 months out rather than outright short equity. The stock’s dividend and quality bid can cushion downside, but estimate revisions create a realistic 5-10% air pocket on weak follow-through.
• For longer-term investors, wait for a post-investor-day reset: if QCOM retraces into a mid-teens forward multiple without AI evidence, the risk/reward improves materially versus buying at a premium while the cycle is still under construction.