Qualcomm sinks as Bernstein slashes price target on smartphone decline
Analyst Stacy Rasgon cuts rating to Market Perform, citing memory headwinds and Apple transition risks
Qualcomm shares fell sharply on Thursday after Bernstein Societe Generale downgraded the semiconductor maker, warning that a deepening slump in smartphone sales will pressure the chipmaker's core business even as it faces the impending loss of Apple as a customer.
Analyst Stacy Rasgon cut his rating on Qualcomm to Market Perform from Outperform and reduced his price target to $140 from $175, a 20% reduction that reflects what he described as "building memory headwinds" across the industry. The downgrade comes as Qualcomm's stock has already declined approximately 24% over the past year, reflecting growing investor concern about the company's reliance on the struggling smartphone market.
"The sell-side appears to have mis-modeled the Apple roll-off, and potential narrative headwinds include risk associated with expiration of the Apple license agreement in a year and Samsung share dynamics," Rasgon wrote in a note to clients. The Bernstein analyst now projects "potential for double-digit unit declines this year" in overall smartphone shipments, a deterioration he says will "get worse before it gets better" for Qualcomm.
The smartphone market is facing its worst contraction on record, according to multiple research firms. IDC forecasts a 12.9% year-on-year drop in global smartphone shipments for 2026, which would mark the lowest annual volume in over a decade. Counterpoint Research similarly projects a 12.4% decline, while Morgan Stanley has cut its 2026 forecast by 15% to 1.1 billion units. The primary culprit: surging memory chip prices driven by explosive demand from AI infrastructure, which are increasing device costs and weakening consumer demand.
"Rising memory component costs are a key factor," Counterpoint noted in its March report, adding that manufacturers are being forced to increase retail prices, "which in turn is expected to weaken consumer demand, particularly for entry-level devices."
For Qualcomm, which derives the majority of its revenue from smartphone modem and processor chips, these macro pressures compound company-specific challenges. Apple is developing its own in-house modems, with the first custom chip—the C1—expected in some iPhone and iPad models this year. Qualcomm executives have previously indicated they expect their share of Apple modems to drop to 20% by 2026, and a complete Apple exit could result in an estimated annual revenue decline of $7.3 billion to $7.8 billion starting in 2028.
Qualcomm's most recent guidance for the fiscal second quarter, which includes March, projects revenue between $10.2 billion and $11.0 billion with non-GAAP earnings per share of $2.45 to $2.65. The company maintains an agreement to supply 5G modem systems for Apple's smartphone launches through 2026, but analysts increasingly view this as a countdown clock rather than a source of stability.
The Bernstein downgrade is the third negative call on Qualcomm in the past 60 days. Seaport Research Partners downgraded the stock to Sell with a $100 price target, while Bank of America initiated coverage with an Underperform rating. These moves reflect a broader shift in sentiment on Wall Street, where Qualcomm's analyst rating profile now shows 23 hold recommendations versus 13 buy-side ratings, according to market data.
Trading at $130.35, Qualcomm now offers roughly 7% upside to Bernstein's new $140 price target—a sharp reduction from the previous outlook that suggested more than 34% potential gains. The stock has struggled to recover from its 52-week high of $203.60, hovering closer to its 52-week low of $118.03 as investors reassess the company's growth prospects in a post-smartphone boom era.
Bernstein's Rasgon noted that positive factors like share buybacks and potential opportunities in datacenter products "are probably not enough to offset the current situation amid weak smartphones." The firm's downgrade reflects a growing consensus among analysts that Qualcomm's diversification efforts—including automotive chips and internet-of-things products—have yet to provide sufficient offset to the deteriorating outlook in its core mobile business.