Is Qualcomm Stock Heading for a Fall?
Qualcomm (QCOM) has stumbled before. Its stock plunged more than 30% within a span of less than 2 months in 2020, wiping out billions in market value and erasing massive gains in a single correction. If history is any guide, QCOM stock isn’t immune to sudden, sharp declines.
Specifically, we see these risks:
- Margin Compression from Unfavorable Product Mix and Rising Costs
- Handset Revenue Slowdown due to Supply Chain Disruptions
- Intensifying Competition in Premium-Tier Android Market
Risk 1: Margin Compression from Unfavorable Product Mix and Rising Costs
- Details: Net income down 6% YoY despite 5% revenue growth (Q1 2026), Potential for further EPS erosion if trend continues
- Segment Affected: QCT (Qualcomm CDMA Technologies)
- Potential Timeline: Immediate and ongoing through fiscal 2026
- Evidence: Gross margin declined to 55% from 56% a year ago (Q1 2026 10-Q), Operating margin compressed by ~300 bps YoY (Q1 2026), R&D expenses increased to 20% of revenue (Q1 2026)
Risk 2: Handset Revenue Slowdown due to Supply Chain Disruptions
- Details: Q2 2026 revenue guidance of $10.2B – $11.0B, below consensus expectations, Negative impact on near-term revenue and earnings growth
- Segment Affected: QCT – Handsets
- Potential Timeline: Next 1-2 Quarters (Q2-Q3 2026)
- Evidence: Management cited ‘industry-wide memory supply constraints’ impacting handset demand (Q1 2026 Earnings Call), OEMs in China reducing handset build plans and channel inventory (Q1 2026 Earnings Call)
Risk 3: Intensifying Competition in Premium-Tier Android Market
- Details: Loss of market share with key Android OEMs, Increased pricing pressure, further eroding gross margins
- Segment Affected: QCT – Handsets
- Potential Timeline: Fiscal year 2026 and beyond
- Evidence: Samsung to use its in-house Exynos 2600 for a significant portion of Galaxy S26 models (February 2026), MediaTek gaining traction with its Dimensity series in the premium segment, competing on performance and price (January 2026)
What Is The Worst That Could Happen?
Looking at QCOM’s risk in past crises shows some heavy dips despite solid fundamentals. It plunged nearly 79% in the Dot-Com crash and about 48% during the Global Financial Crisis. Inflation shocks and Covid saw declines of 35-44%, while the 2018 correction still hit over 33%.
But the stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read QCOM Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
Is Risk Showing Up In Financials Yet?
- Revenue Growth: 10.3% LTM and 2.3% last 3-year average.
- Cash Generation: Nearly 28.8% free cash flow margin and 27.2% operating margin LTM.
- Valuation: Qualcomm stock trades at a P/E multiple of 29.0
| QCOM | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | Semiconductors | – |
| PE Ratio | 29.0 | 25.2 |
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| LTM* Revenue Growth | 10.3% | 6.4% |
| 3Y Average Annual Revenue Growth | 2.3% | 5.4% |
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| LTM* Operating Margin | 27.2% | 18.8% |
| 3Y Average Operating Margin | 26.1% | 18.2% |
| LTM* Free Cash Flow Margin | 28.8% | 14.0% |
*LTM: Last Twelve Months
If you want more details, read Buy or Sell QCOM Stock.
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