Qualcomm Technologies, Inc. QCOM recently introduced the cutting-edge Snapdragon 7 Gen 4 Mobile Platform. One of the significant improvements in the new platform is a 65% improvement in AI performance. This will ensure seamless support for various large language models, generative AI assistants and stable diffusion image generation on smartphones. A 30% faster GPU rendering will facilitate improved framerates and smoother gameplay. To improve the gaming experience, the company has included Snapdragon Elite Gaming features into the platform. 27% improvement in CPU performance will ensure seamless multitasking and enhanced system responsiveness.
Qualcomm has been actively collaborating with major smartphone manufacturers to develop a solution tailored to their requirements. The newly launched solution has already gained solid market traction. Leading OEMs such as HONOR and vivo have already selected the Snapdragon 7 Gen 4 Mobile Platform for their upcoming devices. Realme is also expected to adopt the new platform.
The solution brings several multimedia capabilities. New camera capabilities include video super resolution, hardware electronic image stabilization and advanced image processing features. The 3GPP release 17 for 5G, along with support for WiFi 7 and Bluetooth 6.0, ensures seamless connectivity. Moreover, support for Snapdragon Sound technology, including Qualcomm Expanded Personal Area Network technology, ensures premium wireless audio quality.
Qualcomm Snapdragon 7 series is used primarily in mid-range smartphones. Availability of advanced camera capabilities, action-packed gaming and advanced on-device AI in the Snapdragon 7 series chip set will be a game changer for mid-range smartphone users.
QCOM Rides on Portfolio Strength, Innovation and AI Focus
The company has ramped up its efforts to solidify its position in the rapidly growing AI domain. QCOM took the market by storm with the launch of the Snapdragon X chip for mid-range AI desktops and laptops. The chip comprises an 8-core Oryon central processor, a graphics component and a neural processing unit (NPU). The NPU accelerates AI workloads, offering 45 TOPS (trillions of operations per second), making it an ideal platform to power Copilot+PCs, Microsoft’s vision of AI-first, flagship Windows hardware.
Under its Vision 2030, Saudi Arabia is heavily investing in advanced AI and 5G technologies to drive nationwide digital transformation. Qualcomm has positioned itself as a key player in that initiative. QCOM has joined forces with HUMAIN to develop AI data centers to deliver cloud-to-edge hybrid AI services. It has formed a partnership with Aramco Digital to support the development of advanced edge AI industrial IoT devices and end-to-end solutions. Qualcomm is also witnessing solid market traction in the automotive business. In second-quarter fiscal 2025, automotive revenues rose 59% to $959 million, driven by increased content in new vehicle launches with its Snapdragon Digital Chassis platform.
These developments suggest Qualcomm is moving beyond the smartphone industry by diversifying its portfolio and venturing into new high-growth verticals such as AI PC, AI data centers, automotive and edge AI industrial IoT technologies and solutions. Its strategy of continuous innovation and portfolio diversification will likely boost commercial prospects.
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Major Challenges for QCOM
Samsung and Apple, Inc. AAPL, which have been major buyers of Qualcomm chips for several years, are now moving toward in-house chip development. Samsung has launched several mobile chips under its Exynos lineup, which are used in both the mid-range and premium smartphone segments. Apple has also introduced several chips for its smartphone and PC products. The company uses the A18 Pro chip for the iPhone 16 Pro series and the A18 for iPhone 16 models. Moreover, in the iPhone 16e model, Apple has replaced the Qualcomm modem previously used in iPhone 15 models with an in-house C1 modem. Such initiatives from long-standing customers are a major concern for Qualcomm.
The company is also facing intense competition from MediaTek in the mid-range smartphone segment. In the network space, the company faces competition from Broadcom Inc. AVGO. Despite some major issues, Intel Corporation INTC continues to be the dominant player in the PC market. With innovative launches such as Intel Core Ultra 200V series processors, the company is gaining strong momentum in the AI PC domain. Despite enhanced power efficiency and connectivity of Snapdragon X Elite and Snapdragon X Plus processors, Qualcomm has to match the seamless compatibility that Intel processors offer with existing software to gain a competitive edge. This is a complex endeavor.
Qualcomm has an extensive presence in China. Sino-U.S. trade hostilities can significantly impact its operations. However, following negotiations, both the United States and China have decided to temporarily reduce tariffs. If they fail to reach a resolution within this period, tariffs may rise again. This will negatively impact QCOM’s operating margin.
Price Performance
QCOM shares have declined 21% over the past year against the industry’s growth of 20.7%. The company has outperformed Intel but underperformed relative to Broadcom. Intel has declined 32.7%, while Broadcom has surged 64.7%.
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Estimate Revision Trend of QCOM
Earnings estimates for 2025 have increased 0.34% to $11.8 over the past 60 days, while the same for 2026 has decreased 1.85% to $12.21. This portrays mixed sentiments about the stock’s growth potential from investors.
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End Note
Qualcomm intends to be the driving force in the next wave of AI innovations. The company’s effort to broaden its market reach beyond the mobile chipset market is an important step toward that direction. The future of AI innovation is not concentrated in a particular sector, but it is dispersed across a vast ecosystem. Hence, Qualcomm’s multi-dimensional approach is creating new revenue-generating opportunities in automotive, industrial IoT, data center, and edge AI domains while also strengthening its leadership position in the mobile chipset industry.
However, aggressive competition in the smartphone chipset market and several of QCOM’s client strategy of in-house chip development are likely to hurt Qualcomm's profits in the future. High exposure to the demanding environment of China is a major concern. With a Zacks Rank #3 (Hold), Qualcomm appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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