Shares of Qualcomm ( QCOM ) fell as much as 6% on Wednesday, a day after the company provided new financial targets for its non-smartphone business on its first investor day in three years.
Qualcomm, which gets the majority of its revenue from designing and licensing handset chips, has expanded into semiconductors that go into cars, personal computers, and other devices.
The company now expects these businesses to generate combined sales of $22 billion by 2029.
The $8 billion in sales will come from Qualcomm’s automotive segment, which already has a partnership with BMW to improve computing functionality in vehicles and drive more autonomously.
Qualcomm predicts that $14 billion will come from the Internet of Things segment, which includes augmented reality devices and industrial functions. It also includes PC, expected to account for $4 billion. The company’s Snapdragon X Elite chip powers Microsoft’s latest generation Surface laptop, which features the GenAI Copilot assistant.
“Everyone who bought the X Elite was very happy,” Qualcomm CEO Cristiano Amon said in an interview after the investor day in New York. “From all the OEMs (original equipment manufacturers) and Microsoft, the response so far has exceeded everyone’s expectations.”
Amon called the $4 billion target for the PC business “high confidence.”
But some analysts say the road has not been smooth.
“While management is optimistic about PC AI opportunities, Windows-on-ARM skepticism and strong competition (from x86 and ARM SoC providers) may limit QCOM’s opportunities,” wrote Raymond James’ Srini Pajjuri in a note to clients. They have the same Perform Market rating as the stock in the stock.
Bank of America’s Tal Liani rates Qualcomm a Buy and “remains positive on Qualcomm’s long-term position and diversification outside of handsets.”
But Liani pointed out that the company should not only enter the market with emerging technologies, but also gain market share.
“This market must be developed to support Qualcomm’s long-term goals, the speed and magnitude of which (are uncertain),” he wrote.
Qualcomm’s biggest business remains smartphones, and the ramped-up diversification comes as Apple ( AAPL ) works to migrate away from Qualcomm modems. For the Android-based business, Amon said he envisions mid-single-digit growth, which he calls a “conservative assumption.”
That means the company expects to end the decade with revenue on average split between handsets at 50% and cars and the Internet of Things combined at the other 50%.
