Qualcomm Stock Slides 30%: Buying Opportunity Ahead of July 29 Earnings

Key Points

• Qualcomm shares have fallen over 30% since late May despite the company doubling its fiscal 2029 non-handset revenue target at its June Investor Day.
• Analysts remain split, with GF Securities holding a cautious Hold rating while TD Cowen reiterated a Buy rating and raised its price target to $225.
• Qualcomm's July 29 earnings report will be scrutinized for data center customer traction and margin commentary that could resolve the current valuation disconnect.

Few stocks have tested investor patience like Qualcomm Inc. NASDAQ: QCOM this summer. After hitting a high at the end of May, the chip giant gave back over 30% of its value through last Friday's close, unwinding much of a rally that had looked like the start of something far more durable.

What makes the slide so frustrating for the bulls is that it has come despite so many recent bullish updates. Qualcomm used its June Investor Day to double its fiscal 2029 non-handset revenue target and lay out a credible data center strategy with blue-chip customers already signed up. That was arguably the most consequential update in the company's recent history, and yet the stock has gone backward ever since.

With Qualcomm's next earnings report due July 29, the disconnect raises the question: has the market been justified in sending shares back to 2021 levels, or has it overreacted and created a golden entry opportunity?

Why the Sell-off Doesn't Make Sense

The core of the bullish argument is straightforward. Qualcomm is still being valued largely as a legacy handset chipmaker, even though the company has spent the past year methodically building something quite different underneath.

Last month’s Investor Day made that ambition explicit, with a doubled non-handset revenue target underpinned by a data center business targeting billions in revenue by the end of the decade, alongside meaningful growth ambitions in its automotive and internet of things (IoT) units.

Add in the string of acquisitions Qualcomm has made to bolster its go-to-market offerings, and this starts to look like a company that has been quietly assembling the pieces for a real transformation.

However, the market isn't buying it. But the gap between what Qualcomm says it will become and how investors price it today is precisely where the best opportunity may lie.

The Bear Case Deserves a Hearing

The skeptics have some fair points, and the biggest one is timing. Even the most enthusiastic supporters of the data center strategy acknowledge that meaningful revenue is a multi-year story rather than something that’ll show up in the coming quarters. Investors buying today on the strength of the pivot are being asked to wait, and markets are rarely patient.

There's also the matter of what happens to the core business in the meantime. Qualcomm still carries real customer concentration risk, with the long-flagged prospect of Apple Inc. NASDAQ: AAPL moving its modem work in-house hanging over the handset division. Margin pressure in the existing business is another concern, and it's a legitimate worry that the costs of building out the new one could weigh on profitability before the payoff arrives.

Those risks are why some analysts remain firmly on the fence. GF Securities recently initiated coverage at Hold, acknowledging the scale of the data center opportunity while arguing that more visibility is needed into how competitive Qualcomm's offering will prove to be.

The Analyst Split Tells Its Own Story

That caution, however, sits alongside a notably more bullish view from TD Cowen, which reiterated its Buy rating on Qualcomm this past week and lifted its price target to $225, implying roughly 30% upside from current levels.

The divergence between those two positions captures the entire debate.

The bears are focused on the next few quarters, where handset dynamics and uncertainty around its long-term pivot dominate.

The bulls are focused on the next few years, where the data center business either delivers on its targets or it doesn't. Both can be right at once, which helps explain why the stock has been so volatile.

What the July 29 Report Needs to Deliver

All of which brings the focus squarely onto the company’s upcoming earnings report. The headline numbers will matter, but the commentary around them will matter much more, and there are a few specific things worth listening for.

The most important update is on the data center roadmap, particularly customer traction and how management frames the timeline for revenue to start landing. Concrete progress there would go a long way toward closing the credibility gap that has opened up since Investor Day. Beyond that, watch for evidence that Qualcomm’s diversification story is actually offsetting handset concentration, and for any commentary on how its margin profile is expected to evolve as the mix shifts.

Get those right, and a stock that has fallen 35% while its long-term story arguably improved could start to look badly mispriced. Fall short, and the market's skepticism about the ongoing pivot will only strengthen.