What Changed In Qualcomm’s Story?
Qualcomm (QCOM) stock is currently priced at 20.0 times earnings, trading below the 21.9 multiple of the S&P 500. Investors paying that price need a clear understanding of what they are buying, particularly as the company shifts its public priorities. Back in July 2025, executives anchored their presentations on sales targets for automotive and IoT chips, which power connected consumer and industrial devices. By the latest call, those figures had taken a back seat. So what does Qualcomm lead with now?
Qualcomm Is Entering A New Chip Market
Executives are now highlighting chips for data centers, a market the company is only just entering. During the fiscal Q3 2026 earnings call in July 2026, management stated that Qualcomm was “expanding into the data center with 4 unique product lines.”
That represents a distinct shift in messaging. During the fiscal Q3 2025 call a year earlier, leadership instead focused on a fiscal 2029 target of $22 billion in combined automotive and IoT revenue.
Those alternative revenue streams remain critical because Qualcomm relies heavily on smartphones. Its chip business made up 87% of revenue in fiscal 2025, and phones generated $5.1 billion of that segment’s $8.5 billion in revenue during fiscal Q3 2026. And on its July 2026 call, Qualcomm said it expected its share of the then-upcoming iPhone launch to be materially lower than its prior estimate of 20%. Management characterizes this push beyond phones as its diversification strategy.
How Big Are Qualcomm’s Old And New Priorities?
Qualcomm already reports its automotive and IoT results, whereas the data center business remains mostly a forecast. The company posted automotive revenue of $1.6 billion in fiscal Q3 2026, marking a 61% increase from a year earlier. In the same period, IoT revenue grew 9% to $1.8 billion.
The data center operation is still in its earliest stages. Wafer production has begun on Qualcomm’s two custom data center chip wins, and these components are due to start generating revenue in the December quarter. Looking further out, management forecast data center revenue of $5 billion in fiscal 2027.
Automotive and IoT products still represent the larger piece of management’s long-term plan. Executives now expect to generate more than $24 billion from cars and IoT in fiscal 2029, compared to more than $15 billion from data centers. The total fiscal 2029 outlook for sales outside phones currently stands at $40 billion.
Can Qualcomm Investors Take Comfort In This?
For the automotive and IoT segments, the internal projections offer reassurance. Management maintained and even expanded its prior targets: the car and IoT portion of the fiscal 2029 outlook is now larger than the forecast provided in July 2025. The company also guided for another record automotive performance in fiscal Q4 2026, projecting revenue growth of approximately 60% from a year earlier.
The data center strategy presents more uncertainty. Management cautioned that the first custom chips will act as a drag of 1.5% to 2% on the chip business’s weighted average gross margin. Executives have also acknowledged that investors want more proof that Qualcomm can execute as a new entrant in this market.
Qualcomm needs the growth outside phones. Overall revenue fell 4.0% from a year earlier in the latest quarter. Looking ahead, management expects fiscal 2027 growth outside phones to replace all of its 2026 Apple product revenue.
Automotive and IoT segments are scaling as management projected, yet investors are still waiting for evidence on data center chips. Recording data center revenue in the December quarter would demonstrate that Qualcomm’s two custom chip wins have successfully translated into sales.
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