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Qualcomm (QCOM) Downgraded as Handset Drag Limits Upside, Analyst Says

QUALCOMM Incorporated (NASDAQ:QCOM) is one of the AI Stocks Investors Are Watching Closely. On January 9, Mizuho analyst Vijay Rakesh downgraded the stock from Outperform to Neutral with a price target of $175.00 (from $200.00).

The firm is cautious on the stock despite its robust handset positioning, believing that handset drag limits upside. Qualcomm has been dominant in the mobile chip market for a long time now, recently pushing into artificial intelligence (AI) hardware.

Mizuho has downgraded the stock amid weaker growth expectations, lowering its FY26 and FY27 revenue and earnings forecast to below-consensus levels and introducing FY28 estimates that also trail expectations.

Stock market data on a laptop screen. Photo by Alesia Kozik on Pexels

While the firm notes progress in QCOM’s non-handset business, it believes handset exposure still caps upside.

“Downgrade QCOM to Neutral from Outperform. Lower estimates, PT to $175 from $200. Lower FY26 Rev/EPS from $45.9B/$12.12 to $44.2B/$11.67 (below cons. $45.6B/$12.15). Lower FY27 Rev/EPS from $46.5B/$12.73 to $44.4B/$11.84 (below cons. $46.4B/$12.44). Introduce FY28 Rev/EPS at $45.6B/$12.20 (below cons. $48.8B/$13.02). Our $175 PT is 14.8x FY27 EPS (prior 15.7x), in line with its 14–15x 2–3Y average, which fairly values QCOM below the SOX at ~25x as we see QCOM EPS declining 3% y/y and up 1–3% y/y in FY26–28E. We see QCOM positioned well with non-handset businesses ramping, though with handsets accounting for >70% of QCT revenue, C26E headwinds to the handset industry limit upside.”

QUALCOMM Incorporated (NASDAQ:QCOM) develops wireless technologies, supplies chips for mobile, automotive, and IoT, licenses patents, and invests in emerging tech.

While we acknowledge the risk and potential of QCOM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than QCOM and that has 10,000% upside potential, check out our report about this cheapest AI stock.

READ NEXT: 11 AI Stocks on the Market’s Radar and 10 AI Stocks Gaining Attention on Wall Street

Disclosure: None.

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