Qualcomm’s Stock Faces Potential Risks Amid Economic Shifts

Question: How would you feel if you owned Qualcomm Stock (NASDAQ:QCOM) and it dropped 40% or more in the upcoming months? While this might seem like an extreme scenario, it’s important to recognize that similar events have occurred in the past. Qualcomm’s stock has performed relatively well during this year, increasing about 5% since January, in contrast to the S&P 500 which has decreased roughly 2% in the same timeframe. Yet, the company may encounter several short-term challenges that could jeopardize its stock price, particularly due to rising exposure to China, increasing macroeconomic uncertainties in the U.S. triggered by President Donald Trump’s tariffs on critical trading partners, and Apple’s growing involvement in the mobile modem market. Investors should remain cautious, as a decline below $100 per share could be in the realm of possibility. Here’s why you should be concerned.

Key Concerns on the Horizon

In a downturn, Qualcomm’s QCOM stock could suffer significant losses. Historical data from 2022 shows AMD’s stock fell by over 40% within a few quarters. If a similar scenario were to unfold for Qualcomm, currently priced around $160, a drop below $100 might be likely. Individual stocks generally exhibit higher volatility compared to diversified portfolios. Thus, investors aiming for potential gains with reduced risk might consider the High-Quality portfolio, which has consistently outperformed the S&P 500, boasting returns exceeding 91% since its inception.

Why Is It Relevant Now?

Currently, Qualcomm is experiencing increased demand from China, fueled by the growing popularity of premium Android devices. The company’s licensing segment is also making headway with long-term agreements established with Chinese manufacturers such as Honor and Shenzhen Transsion Holdings. In fact, Chinese companies represented 46% of Qualcomm’s total revenue in the last fiscal year. However, this dependence on the Chinese market raises significant risks amid escalating tensions in the U.S.-China trade war under the Trump administration. Proposed increases in tariffs on Chinese imports from 10% to 20% could risk Qualcomm’s revenue, especially if Chinese firms retaliate by limiting purchases of U.S.-made components. Furthermore, ongoing supply chain dynamics suggest that current demand may be driven by OEMs stockpiling chips in anticipation of further trade conflicts.

Trump’s recent suggestion of a tariff rate “25% or higher” on semiconductor chips imported into the U.S. could significantly impact Qualcomm, despite its reliance on Chinese manufacturing and exports. The administration’s decisions around tariffs and immigration have raised inflation concerns, placing additional stress on the U.S. economy. Should economic strains worsen, leading to a recession, it presents further challenges for Qualcomm. Tariffs typically inflate import costs, pushing prices higher, which can stifle consumer spending and weaken disposable income. This, in turn, could harm the demand for crucial CPU products from competitors like AMD, as consumers may delay purchases of PCs and laptops.

Moreover, Apple’s development of its modem chips constitutes another risk for Qualcomm. The entry-level iPhone 16e has introduced the Apple-designed modem, Apple C1, to replace Qualcomm’s offerings. While Qualcomm does not disclose customer-specific revenue, analysts estimate Apple accounts for over 20% of Qualcomm’s total sales—a considerable proportion. Although the transition to in-house Apple chips is expected to be gradual, it may significantly affect Qualcomm’s profit margins due to the advanced technology typically found in Apple products. This looming risk continues to cast uncertainty over Qualcomm’s financial outlook.

Assessing QCOM Stock Resilience During Market Downtimes

Historically, QCOM stock has demonstrated resilience, often faring slightly better than the S&P 500 during market downturns. Concerned about how a market crash might impact QCOM stock? Our dashboard, How Low Can Qualcomm Stock Go In A Market Crash?, offers an in-depth analysis of the stock’s performance amid past market crashes.

Inflation Shock (2022)

• QCOM stock experienced a 44.9% drop from its peak of $188.69 on January 17, 2022, to $103.88 by November 3, 2022, in comparison to a peak-to-trough decline of 25.4% for the S&P 500.
• The stock returned to its pre-crisis high by May 14, 2024.
• Following this, it peaked at $227.09 on June 19, 2024, and is currently valued at around $160.

Covid Pandemic (2020)

• QCOM stock declined by 32.7% from $90.56 on February 19, 2020, to $60.91 on March 22, 2020, while the S&P 500 recorded a decline of 33.9%.
• The stock fully recovered to its pre-crisis peak by June 8, 2020.

Global Financial Crisis (2008)

• QCOM stock fell by 48.2% from $56.37 on August 17, 2008, to $29.21 on November 20, 2008, versus a peak-to-trough reduction of 56.8% for the S&P 500.
• The stock fully recovered to its pre-crisis peak by February 10, 2011.

Current Valuation Status

Qualcomm has experienced steady revenue growth in recent years, and its stock currently trades at a modest forward earnings ratio of 17x. Over the past three years, revenue has averaged a growth rate of 7.2%. However, projections indicate a potential slowdown in growth rates by 2026, particularly as a larger share of business moves to Apple. The trade war’s volatility further complicates the outlook. Thus, investors should contemplate: Do you wish to hold onto your QCOM stock at this juncture, or might you panic and sell if it begins to decline toward $120, $100, or even lower? Holding onto a declining stock can be challenging. Trefis collaborates with Empirical Asset Management, a Boston-based wealth manager whose asset allocation strategies delivered returns during the 2008-09 period when the S&P lost over 40%. Empirical has integrated the Trefis HQ Portfolio to offer clients improved returns with less risk compared to benchmark indices; providing a smoother investment experience, as seen in the performance metrics of the HQ Portfolio.

Returns	Mar 2025 MTD [1]	2025 YTD [1]	2017-25 Total [2]
QCOM Return	3%	6%	211%
S&P 500 Return	-3%	-2%	158%
Trefis Reinforced Value Portfolio	-4%	-5%	643%

[1] Returns as of 3/10/2025
[2] Cumulative total returns since the end of 2016

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.