Qualcomm Juggles China Diplomacy and Apple Revenue Gap as AI Hopes Cool

Qualcomm shares drop 8% after overbought rally, with Apple modem loss looming. CEO Amon seeks China ties and touts record automotive revenue, AI chip deals. Analysts cautious.

The euphoria surrounding Qualcomm’s recent rally has waned as the stock closed the week at €175.54, shedding roughly 8% in five sessions. The pullback followed a five-week surge that had pushed shares to a 52-week high near €202, but a 14-day RSI of 75.4 — firmly in overbought territory — triggered profit-taking. Despite the retreat, the market cap remains above $212 billion, supported by a forward price-to-earnings multiple of 18.7, above its five-year average of 14.3 though still below the sector median of 24.2.

The biggest cloud over Qualcomm’s outlook is the deepening rift with Apple. Chief Financial Officer Akash Palkhiwala revealed that when the next iPhone launches, Qualcomm will hold only an estimated 20% share of the modem supply, with no further product relationship beyond that. UBS calculates the annual revenue headwind at $4 billion to $5 billion relative to the 2026 baseline. That sobering projection sits uncomfortably alongside the AI-driven optimism that had propelled the shares.

Balancing that pressure, CEO Cristiano Amon traveled to Beijing on May 15 to meet Ren Hongbin, chairman of the China Council for the Promotion of International Trade, aiming to strengthen ties between American and Chinese companies and secure supply chains. Amon voiced strong confidence in China’s industrial AI potential and pledged to keep expanding Qualcomm’s presence there. The delegation included prominent tech executives such as Nvidia’s Jensen Huang, Tesla’s Elon Musk and Apple’s Tim Cook, underscoring the strategic importance of a market that blends smartphone demand, regulatory sensitivity and fast?growing AI applications.

Amon also has a new growth engine to tout. In the most recent quarter, Qualcomm’s automotive segment hit a record $1.33 billion in revenue, up 38% year?on?year. More critically, the company has secured a deal to supply custom chips to a major hyperscaler, with first deliveries expected before the end of 2026. The identity of that customer is set to be disclosed at Qualcomm’s upcoming investor day in June, an event that will test whether the AI narrative can be backed by concrete volume and margin details.

The company’s capital?return programme adds a cushion: a quarterly dividend of $0.92 per share yielding roughly 1.8%, plus a $20 billion share?repurchase authorization. Nevertheless, analysts remain guarded. Of the 34 covering the stock, only 14 rate it a buy, 16 recommend hold and four say sell. The average 12?month price target is $180.37, below current levels. Earnings estimates for the third quarter of 2026 range from $2.10 to $2.30 per share, down from $2.65 in the prior quarter.

Institutional positioning has been mixed. Commerzbank FI cut its Qualcomm stake by 26% in the fourth quarter of 2025, while others like DNB Asset Management and Lawood & Co. adjusted holdings without a clear directional trend. The broader semiconductor sector has also cooled, adding to the stock’s near?term challenges.

For Qualcomm, the next few weeks will be pivotal. The June investor day must convince the market that the hyperscaler deal is more than a one?off win — enough to offset the Apple revenue gap and the persistent softness in Android smartphone demand. If management delivers a clear roadmap, the AI story could regain its spark. If the details remain fuzzy, the China expansion and automotive strength alone may not be enough to keep the rally alive.