Mizuho lowers Qualcomm stock price target to $185 on QCT margin concerns

Qualcomm (QCOM) reported strong fiscal Q3 2025 earnings, surpassing analyst expectations with an EPS of $2.77 and revenue of $10.37 billion, which led to a modest stock price increase. While Mizuho slightly reduced its price target to $185 from $190, it maintained an Outperform rating, citing the stock's attractive valuation. The company provided in-line September quarter guidance, anticipating growth in its QCT and QTL segments driven by handset flagship launches, alongside significant expansion in its automotive business and future AI inference capabilities via the Alphawave acquisition.

Analysis

Qualcomm demonstrated solid operational performance in its fiscal third-quarter 2025, exceeding analyst expectations with an EPS of $2.77 and revenue of $10.37 billion. The company's forward guidance for the September quarter is stable, projecting in-line revenue of $10.7 billion, though with modestly lower QCT margins. Growth is expected to be broad-based, with sequential forecasts of 3% for the QCT segment, 2% for QTL driven by new handset launches, and a particularly strong 11% for the automotive segment, which has secured 12 new design wins. Despite this positive performance, Mizuho trimmed its price target to $185 from $190, while importantly maintaining its "Outperform" rating, suggesting continued confidence. The company's strategic positioning is reinforced by the planned Alphawave acquisition, set to close in Q1 2026 to bolster its AI data center capabilities, and the notable absence of any reported demand pull-ins from China, which de-risks the near-term outlook. With an InvestingPro Health Score of "GOOD" and a P/E ratio of 16.12, the stock's valuation appears attractive relative to its growth trajectory.

Key Decisions for Investors

• Given the strong earnings beat, stable guidance, and an attractive valuation with a P/E of 16.12, investors could consider the current price a favorable entry or accumulation point, seeing the minor price target reduction as a tactical adjustment rather than a change in fundamental outlook.
• Monitor the execution within the high-growth automotive segment, projected to grow 11% quarter-over-quarter, as its performance is a key catalyst for future revenue diversification and overall expansion.
• While the outlook is positive, it is prudent to watch for any further compression in QCT margins in subsequent reports, as this was flagged as a modest headwind that could impact segment profitability.
• Factor in the long-term growth potential from the Alphawave acquisition, which targets the AI data center market, but recognize that its financial impact is not expected until after the deal closes in Q1 2026.