Qualcomm's (QCOM) recent deal with SpaceX's (SPCX) Starlink provides QCOM stock with another growth engine, in addition to its rapidly expanding data-center and automotive chip businesses. Meanwhile, the growth of memory prices appears to be cooling, which also bodes well for the chipmaker.
In light of these points, and with the relatively low valuation of QCOM stock currently, value investors focused on the long term may want to consider buying shares of Qualcomm. Let's take a closer look.
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www.barchart.com About Qualcomm Stock
Qualcomm specializes in providing chips for smartphones, as well as automotive chips, network security, and data-center solutions. The company is based in San Diego, California, and has a market capitalization of $176.9 billion.
On Nov. 4, Qualcomm reported its fourth-quarter fiscal 2026 results. For the period, revenue dropped 8% versus the same period a year earlier to $10.3 billion. Non-GAAP diluted EPS fell 28% year-over-year (YOY) to $2.17 per share.
The company also provided guidance for Q1 fiscal 2027 in the report. For the current quarter, Qualcomm expects adjusted EPS between $2.15 and $2.35, or $2.25 at the midpoint. Meanwhile, analysts expect EPS of $1.67 for the December quarter.
Currently, Qualcomm stock's valuation is relatively low as well. QCOM stock has a forward price-to-earnings (P/E) ratio of 21.9 times.
Growth Engines Are Piling Up for Qualcomm
On Nov. 4, Qualcomm and SpaceX also announced that, within the framework of a multiyear agreement, Qualcomm will provide equipment for Starlink's terrestrial 5G network. Although Qualcomm did not disclose how much revenue it will derive from the deal, it could be a sizable amount, as this is one of the company's largest 5G deals so far. Starlink reportedly intends to develop a nationwide satellite and terrestrial network, making Qualcomm look well-positioned to generate needle-moving revenue from its work with the company.
On the data-center front, Qualcomm expects to generate $650 million of revenue from the category in Q1 alone. Moreover, it expects data-center sales to jump to $5 billion in fiscal 2027. That upbeat outlook comes after Qualcomm signed a huge deal with Amazon (AMZN) earlier this year. Under the 10-year deal, Amazon will purchase up to $60 billion of Qualcomm's products and partner with the company on the development of AI inference hardware. Amazon also obtained warrants to purchase as many as 25 million shares of QCOM stock.
Encouragingly, Qualcomm CEO Cristiano Amon reported that the firm has more demand than it can handle in the data-center space, indicating that its revenue and profits from the business should surge as it obtains more supply.
Meanwhile, another growth engine for Qualcomm is its automotive offerings. Revenue from the automotive business jumped 89% year-over-year (YOY) to $1.99 billion in Q4, easily beating expectations.
With growth in both its automotive and the data-center businesses, Qualcomm is clearly diversifying and building up its staying power.
Memory Prices Appear to Be Cooling
A majority of Qualcomm's revenue still comes from smartphones, a market that has been contracting amid rising flash memory costs that have caused smartphone prices to increase. However, the growth of flash-memory costs may now be decelerating. Recently, flash-memory maker Kioxia (KXIAY) reported that the average selling price (ASP) of its NAND flash memory had increased by about 25% in Q3 fiscal 2026. In the quarter prior, that growth had come in at 70%.
Indicating that the handset market may be starting to turn around, Qualcomm CFO Akash Palkhiwala also noted on the Q4 earnings call that Android smartphone sales were beginning to rebound in China. That points to a promising potential turnaround.
On the date of publication, Larry Ramer had a position in: AMZN , AMZU . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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