Qualcomm's Next Gear: A Growth Story Wall Street Might Be Missing

Key Points

• The company's automotive business is rapidly expanding, providing a stable and highly predictable new source of long-term revenue for investors.
• Qualcomm is successfully challenging incumbents in the personal computer market while expanding its technology across the broader Internet of Things.
• Strong financial health and a commitment to shareholder returns underscore management's deep confidence in its forward-looking diversification strategy.

Qualcomm NASDAQ: QCOM heads into its third-quarter earnings report on July 30, and Wall Street will be watching closely. For years, the company has served as a key indicator for the health of the mobile industry, with its fortunes closely tied to smartphone sales.

However, investors who focus only on handset numbers risk missing a fundamental and exciting transformation. A multi-year strategy to diversify the business is now bearing significant fruit.

Qualcomm is aggressively expanding into high-growth sectors, building a more resilient company that is less dependent on the cyclical smartphone market. 

This successful pivot is creating a compelling new investment case centered on the future of automotive technology, artificial intelligence (AI) powered PCs, and the vast possibilities of the Internet of Things (IoT).

The Engine Roars: Qualcomm's Automotive Surge

One of the clearest signs of Qualcomm’s evolution is its accelerating growth in the automotive industry. This segment is quickly becoming a primary engine for the company, delivering impressive financial results and building a foundation for long-term, predictable revenue. In its second fiscal quarter, Qualcomm's automotive revenues reached $959 million, representing a remarkable 59% increase from the same period last year.

The Snapdragon Digital Chassis platform drives this growth. It is a comprehensive suite of solutions that automakers use to power digital cockpits, in-car connectivity, and Advanced Driver-Assistance Systems (ADAS). This platform approach makes Qualcomm an essential technology partner in the modern software-defined vehicle.

To further secure its position, Qualcomm completed its acquisition of Autotalks in June 2025. This move integrates industry-leading Vehicle-to-Everything (V2X) communication technology into its portfolio, a cornerstone for future autonomous driving and road safety systems. For investors, these long-term automotive design wins provide a stable and growing revenue stream, directly offsetting the volatility of the consumer phone market and supporting the company's goal of achieving $8 billion in annual automotive revenue.

Powering the AI Revolution at the Edge

Qualcomm's expansion goes well beyond the car. The company’s IoT segment, which grew 27% year-over-year to $1.6 billion in Q2, has become a launchpad for entering new device categories, most notably the AI PC. With its Snapdragon X Elite processors, Qualcomm has emerged as a serious competitor in a market long dominated by legacy players. These chips offer key advantages in power efficiency and on-device AI processing, enabling a new generation of laptops with multi-day battery life.

This is already translating into market share. In the first calendar quarter of 2025, Snapdragon-powered devices captured approximately 9% of the premium Windows laptop market in the U.S. and key European countries.

Qualcomm's vision for the intelligent edge is also pushing into the data center. The company's recently announced plan to acquire Alphawave Semi OTCMKTS: AWEVF for approximately $2.4 billion provides critical high-speed connectivity technology, accelerating its expansion into a massive, high-margin market driven by global demand for AI. This, combined with new partnerships in industrial IoT, shows a clear strategy: to make Qualcomm's technology a fundamental part of the connected economy.

The Catalyst: What to Watch in the Q3 Report

For investors looking to validate this growth story, the upcoming earnings report offers a clear opportunity. Beyond the headline numbers, these specific metrics will signal if the diversification strategy is maintaining its powerful momentum:

• Automotive & IoT Growth: Look for continued double-digit, year-over-year revenue growth in these two segments.
• QCT Handset Margins: Stable or improving margins will confirm that Qualcomm is holding its leadership position in the profitable premium Android tier.
• Management's Outlook: Pay close attention to commentary on the design-win pipelines for the PC and automotive segments, as this provides a window into future revenue.

Connecting the Dots: Rewarding Investor Confidence

Qualcomm's successful pivot is reinforcing its financial strength and commitment to rewarding investors. With a trailing price-to-earnings ratio (P/E) of approximately 16, the stock’s valuation suggests that the market may not yet be fully pricing in these durable, high-growth revenue streams.

Wall Street is taking note, with a consensus 12-month analyst price target near $185, implying a potential upside of over 15% from its current price. Management is signaling its confidence through its actions.

The company offers a healthy dividend yielding around 2.25% and has committed to returning 100% of its free cash flow to shareholders in fiscal 2025.

This is a powerful statement of belief in the long-term cash-generating power of its new ventures.

Qualcomm’s Road Ahead

Qualcomm’s strategic execution has set it on a clear path to becoming a more balanced and diversified technology leader. While its legacy is in mobile, its future is being built in our cars, on our desks, and across the intelligent enterprise.

The upcoming earnings report will be another key checkpoint in a compelling long-term growth story that is just getting started.