Qualcomm earned $215 target from BofA: Here’s what could derail it

Bank of America is betting on Qualcomm's momentum by raising its price target from $200 to $215 and maintaining its buy rating.

The analyst stated that Qualcomm recorded a “strong quarter with revenues up 10% vs Street's 5.1%, driven by 13.2% QCT growth vs Street's 7.7%.”

The analyst note said that:

QCT growth came from all segments, with Handsets, Auto, and IoT up 14.2%, 17.1%, and 7.4%, respectively.

Bank of America said that Qualcomm’s “intermediate term looks somewhat challenged with unsustainable handset trends, and we expect strength to slow in 2Q26.”

That blend of power and prudence perfectly describes the company's present situation. Strong growth in the automotive and IoT markets shows that Qualcomm is expanding outside smartphones, but the bank argues that the company's QCT revenue still comes from handsets, which may have already peaked for the cycle.

The message for investors is clear: Qualcomm's AI-driven diversification is genuine, but the rise in handsets that helped it surpass expectations may not endure. Bank of America's $215 price target means there is still room for growth, as long as the chipmaker can keep moving toward automobiles, IoT, and new data-center prospects.Qualcomm’s chip business continues to evolve as demand for AI accelerates.Clinton/Sportsfile for Web Summit via Getty Images

By the numbers: Qualcomm’s QCT strength in focus

Bank of America's positive call was based on a clean beat in almost every operational line. Qualcomm's QCT division, which encompasses cellphones, cars, and the Internet of Things, did better than expected in every area.

Here’s how the quarter stacked up:

Total revenue:+10% year over year versus Street’s +5.1% QCT segment: +13.2% vs. Street’s +7.7% Handsets: +14.2% Automotive: +17.1% on digital chassis demand IoT: +7.4% on connected device adoption Operating margin: 33.8%, about 20 basis points below Street expectations Earnings per share: 12 cents above consensus Valuation shift: Model rolled to FY27E, multiple increased to 17x from 15x FY26E

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The findings were "strong QCT results across all segments," analysts said, indicating that the strength was evenly distributed throughout all its product lines, rather than concentrated in just one.

BofA's new model now expects Auto and IoT to contribute more in the long term, which helps offset what it views as a transitory rise in smartphone sales.

The catch: Qualcomm handset strength looks transitory

Bank of America's positive outlook for Qualcomm comes with a clear asterisk: the rise in cellphone sales is cyclical, not structural.

Smartphone demand in China was the main driver of the quarter, thanks to holiday releases of Android phones and a trend toward higher-end models. That mix change helped QCT expand by double digits, but it probably won't happen again when seasonal influences wear out in early 2026.

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At the same time, Samsung's portion of Qualcomm's flagship chipset market is likely to shrink from a rare 100% this year to around 75% next year with the Galaxy S26. Apple's arrangement to provide modems is coming to an end, and significant Chinese companies, including Xiaomi, are still putting money into their own silicon.

Related: Samsung’s craziest phone yet might skip the US, and that matters

That mix means that Qualcomm will have a harder time in the second half of fiscal 2026, when phone sales slow down and regional tailwinds vanish.

Bank of America's thesis is based on the idea that new sources of income, such as cars, the Internet of Things, and data centers, can offset the loss of income from cell phones.

Here's what might spur Qualcomm's durable growth

Even if the smartphone cycle seems to be slowing down, Qualcomm's overall growth story is finding momentum in areas that Wall Street used to ignore.

The automotive engine is still the most apparent one. The segment expanded 17.1% from one year to the next, due to the demand for Qualcomm's digital chassis platform, which now drives more and more connected cars.

Automakers including, BMW, Hyundai, and GM are offering the business steadier visibility than cellphones ever could because they are putting more material in each vehicle and winning long-term design contracts.

IoT kept growing at a solid rate, up 7.4%, thanks to embedded systems, wearables, and a rise in the use of smart glasses. Analysts currently think that this part will do well since devices will keep improving, and generative AI will be added at the edge.

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At the same time, Qualcomm's drive into data centers is gradually coming together. The company's new AI200 and AI250 inference processors are scheduled for release in 2026.

Bank of America described this as a "multi-billion-dollar opportunity" that would initiate a new product cycle. The recent $2.4 billion purchase of Alphawave strengthens the DC portfolio by providing important connectivity IP that fits well with Qualcomm's AI ambitions.

These parts form the basis for Qualcomm's next value rerating, which will rely less on phones and more on the development of connected devices and AI infrastructure.

What to watch in Q1 through Q3 2026

Over the next three quarters, we'll see whether Qualcomm can turn its diversification strategy into tangible results.

In the first quarter of 2026, the business is expected to benefit from its mix of premium-tier handsets, as high-end Android models are anticipated to continue arriving through the Christmas season and into early spring. That should keep margins high, even as unit growth levels are down.

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In the second and third quarters of 2026, Bank of America anticipates that the tailwind from handsets will disappear, making the test more challenging. Investors should keep a close eye on the gross-margin trend, which may become tighter if the mix shifts back to mid-range devices.

Qualcomm will be able to maintain its existing value if it can compensate for it with development in the automotive and IoT markets.

Several milestones will shape that path:

Progress on the AI200/AI250 data-center ramp and early customer adoption Updates on the Apple modem transition and possible renewal Samsung share allocation on the next Galaxy S26 lineup China Android sell-through after the holiday-driven surge New automotive design wins or platform expansions in North America and Europe

When viewed together, those data points will show investors whether Qualcomm's $215 estimate is based on long-term growth or a short-term rebound before phone sales start to pick up again.

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This story was originally reported by TheStreet on Nov 8, 2025, where it first appeared in the Economy section. Add TheStreet as a Preferred Source by clicking here.

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