Qualcomm Sees Surge in Non-Handset Revenue Amid Data Center Expansion

Qualcomm (NASDAQ:QCOM) has been gaining momentum in recent months, and investors may be underestimating its potential. According to a recent analysis by 24/7 Wall St., Qualcomm's stock is rated as a 'buy' with a price target of $228.68 over the next 12 months, implying an upside of 16.27% from its current price of $194.38.

The analysis notes that while Qualcomm's handset business has been declining, its non-handset revenue is expected to grow by more than 60% in fiscal 2027. This growth is driven by the company's expanding data center franchise, which management expects to reach $15 billion in revenue by fiscal 2029.

The analysis also highlights the potential risks facing Qualcomm, including a possible decline in Apple (NASDAQ:AAPL) modem share and increased competition from other companies such as Broadcom (NASDAQ:AVGO). However, it notes that management is pushing through double-digit price increases to recapture margin and stabilize QCT gross margin.

The report's bear-case 12-month floor is $192.71, but the analysts believe that Qualcomm's data center revenue will provide a significant boost to its growth prospects. They point out that Marvell Technology (NASDAQ:MRVL) trades at a similar market cap on far less revenue, making Qualcomm's price target look conservative if it achieves its hyperscaler wins scale.