Qualcomm's Growth Hinges on Data Center Success

Qualcomm's (QCOM) stock has seen significant growth over the past six months, rising by about 37%. Despite this, management expects further growth outside of the phone market, which accounts for a shrinking share of revenue. One area driving growth is automotive sales, which have risen 61% year-over-year in fiscal Q3 2026.

The company's chip sales to BMW, which has chosen Qualcomm as its lead compute silicon provider for its next-generation ADAS and digital cockpit, are part of this growth. Additionally, management expects the fifth-generation Snapdragon digital chassis to start ramping up in September, contributing to higher revenues.

However, Apple's (AAPL) share of Qualcomm's revenue is declining, with management expecting it to fall below 20% due to supply limits and other factors. To offset this drop, Qualcomm plans to grow its non-handset business, which includes data centers. The company expects non-handset revenue growth to jump from 24% in fiscal 2026 to over 60% in fiscal 2027.