Qualcomm's Data-Center Ambitions Draw Fresh Analyst Backing as Smartphone Drag Persists

StoneX keeps a USD 270 target on Qualcomm, RBC lifts to USD 180, as data-center goals offset a shrinking handset business.

Qualcomm is enjoying a renewed vote of confidence on the stock market, and the trigger is less about the Amazon tie-up itself than about the validation it has received from the research community. StoneX analyst Cody Acree reaffirmed his buy rating and kept his price target at USD 270, implying roughly 50 percent upside from the most recent US quote. RBC, meanwhile, lifted its own target from USD 160 to USD 180, citing the growing seriousness with which Qualcomm is building out its data-center business.

Hard Numbers Behind the Re-Rating

What is winning analysts over are concrete figures rather than vague promises. Qualcomm is targeting roughly USD 5 billion in data-center revenue in fiscal 2027, with more than USD 15 billion expected by 2029. The broader non-handset segment carries an even bolder goal: USD 40 billion in revenue by 2029, a sharp upgrade from the previously communicated USD 22 billion mark. For the current year, Qualcomm expects around USD 13 billion in that segment, rising to more than USD 21 billion in 2027 — a gain of roughly 60 percent.

That growth narrative is meant to offset weakness in the legacy smartphone chip business, and the guidance for the coming quarter came in correspondingly subdued.

Amazon as Anchor Partner With a Long Runway

The multi-year cooperation with Amazon Web Services, sealed in September, forms the backbone of the data-center strategy. Under the arrangement, AWS sources custom chips for inference applications, along with server technology and accompanying services, in a deal with an estimated total volume of up to USD 60 billion over ten years. Amazon receives warrants on Qualcomm common stock with an exercise price of USD 161.26, valued at around USD 4 billion if fully exercised and tied to the achievement of specific milestones. Qualcomm expects the first revenue from the agreement in the quarter ending December 2026.

Qualcomm is also pushing diversification on the technology front: together with Samsung Electro-Mechanics, it has spent more than a year developing so-called organic bridge packaging technology, positioned as an alternative to Intel's established EMIB solution and one that would make Qualcomm less dependent on third-party intellectual property.

A Divided Analyst Community

Despite the optimistic individual voices, the consensus is far from euphoric. Depending on the survey, a double-digit number of hold ratings stands against only a handful of buys and the occasional sell. The spread of opinions makes one thing clear: the market rewards the data-center strategy but stays cautious when it looks at the shrinking smartphone business.

The shares currently trade at EUR 163.50 and have climbed 7.8 percent over the past seven trading sessions alone — evidence of how much the recent news flow has already been priced in.

The Number That Matters

Whether the current valuation holds up hinges on a single figure: the pace at which data-center revenue scales from the targeted USD 5 billion in fiscal 2027 to more than USD 15 billion by 2029. That magnitude is expected to carry a substantial share of the USD 40 billion non-handset revenue goal for 2029. Little of it is visible in reported results so far — the handset business shrank 20 percent to USD 5.09 billion in the third quarter of the current fiscal year. The investment case, in other words, rests on a promise rather than on booked revenue.

Where the Bull Case Stands

If the transformation unfolds as sketched, Qualcomm should evolve from a pure smartphone supplier into a more broadly positioned semiconductor group. Automotive already offers evidence of that possibility: revenue rose 61 percent to USD 1.59 billion in the third quarter, the 23rd consecutive quarter of double-digit growth. Management has raised its automotive run-rate target for the current fiscal year from USD 6 billion to USD 7 billion. Should that momentum hold and Amazon orders genuinely begin in the December quarter, StoneX's USD 270 target would have a real foundation. The analyst consensus — 9 buys, 15 holds and 2 sells, with an average price target of around USD 204 — shows, however, that most analysts remain considerably more cautious than StoneX.

Competitive and Structural Risks

Arrayed against that is a genuine competitive threat in the core business. MediaTek unveiled the Dimensity 9600 Pro on Tuesday, the first smartphone chip built on TSMC's 2-nanometer process — ahead of Qualcomm's Snapdragon 8 Elite Gen 6, which is not due to be presented until the Snapdragon Summit between September 22 and 24. According to reports from Korea, Qualcomm is also in talks with Samsung Foundry about partial production of the new chip, because TSMC capacity is heavily booked by Apple; no signed contract exists as yet.

Structural headwinds add to the picture: a possible switch by Apple in modem suppliers could, according to market observers, cost USD 4 billion to USD 5 billion in handset revenue. The data-center bet itself is not risk-free either — Fitch Ratings recently warned of weakening pricing power in the AI services business as a credit risk for the entire sector.

Technicals and the Road Ahead

On the charts, an RSI of 71.7 signals overbought conditions, while the stock sits roughly 27 percent below its 52-week high of EUR 222.90 and just over 12 percent above its 200-day moving average — the recent rally has already front-run a good deal of positive news. As long as automotive figures maintain their pace and the first Amazon orders actually land in the December quarter, the bullish scenario stays intact. If, by contrast, the Snapdragon 8 Elite Gen 6 launch at the end of September disappoints against MediaTek's already available rival chip, or the Amazon ramp-up is delayed, the gap between StoneX's optimistic target and the more sober consensus of about USD 204 is likely to close quickly at the stock's expense. A dividend of USD 0.92 per share on September 24 provides at least a running yield in the meantime, whatever the outcome of the growth wager.