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Qualcomm Is the Problem Child of the Current Chip Rally

2026-05-12 · 13:16 UTC ·Tae Kim from Key Context Newsletter ·3 min read

Brief

Qualcomm is at the center of skepticism in the current chip rally: while the broader semiconductor index climbed nearly 60% from early April 2026, Qualcomm’s stock has surged over 80% since the end of March largely on hopes the company can become a major data‑center AI player. That optimism persisted even after mixed late‑April results and guidance (current‑quarter midpoint revenue $9.6B and EPS $2.20 vs. consensus $10.3B and $2.43). A vague management remark about a custom hyperscaler chip deal — with specifics deferred to an analyst day in June 2026 — and CEO Cristiano Amon’s comments about AI wearables have amplified the narrative. Key Context warns the core mobile franchise is eroding (Apple shifting to internal modems; Android demand hit by rising memory prices), meaning the stock’s run may be priced for a transformation that is unproven and execution‑dependent.

Why it matters

Since the beginning of April 2026 the semiconductor index is up nearly 60%, while Qualcomm shares have risen more than 80% since the end of March 2026.

Key details

  • Qualcomm reported mixed results in late April 2026 and gave current-quarter midpoint guidance of $9.6 billion revenue and $2.20 EPS versus Street consensus of $10.3 billion revenue and $2.43 EPS.
  • A vague management comment about a custom chip deal with a hyperscaler — with more details promised at Qualcomm's analyst day in June 2026 — materially boosted the stock despite weaker guidance.
  • Qualcomm is pitching a pivot into data‑center AI (accelerators and CPUs) and future AI-enabled wearables (CEO Cristiano Amon told Fortune the company is working with AI firms), even as its core mobile businesses face headwinds: Apple is moving to in‑house modems and Android handset volumes are pressured by higher memory prices.
Cleaned source text

The company is selling the dream that it will become a major player in data center AI chips, from AI accelerators to CPUs.

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Qualcomm Is the Problem Child of the Current Chip Rally

Tae Kim

May 12| | | ∙| | Preview

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Chip stocks are having a historic run. Since the beginning of April, the semiconductor index is up nearly 60%.

Key Context has been all over the improving fundamentals of CPUs, GPUs, and HBM memory names on the exponential compute demand ramp from agentic AI, weeks and months ahead of Wall Street. The rallies in many of those companies make sense, as earnings expectations have risen significantly.

One name that has also risen may not deserve it: Qualcomm.

Qualcomm shares are up more than 80% since the end of March, driven by growing optimism that the company will remake itself as a winner in the artificial intelligence trade. The stock kept climbing even after the chipmaker reported mixed financial results in late April with disappointing current quarter midpoint guidance of $9.6 billion in revenue and $2.20 in EPS versus consensus estimates of $10.3 billion and $2.43 in EPS.

A vague comment from management during the earnings call about a custom chip deal with a hyperscaler was enough to boost the shares higher. The company said it will reveal more details during its analyst day in June.

Qualcomm is selling the dream that it will become a major player in data center AI chips, from AI accelerators to CPUs. CEO Cristiano Amon also recently told Fortune that Qualcomm is working with AI companies on future wearable devices.

Caution is in order. Let’s start with the core business, then examine each of these supposed growth opportunities.

The Core Business Is Eroding

Qualcomm’s main businesses include mobile processors and wireless modem chips. Both are under pressure. Apple has started using its own internal modem chips and is set to expand that transition to more iPhone models later this year. On the Android side, phone sales are getting crimped by higher memory chip prices. The core business is at risk of driving earnings materially lower going forward...

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