Shares of Qualcomm (QCOM) are pulling back this week after a massive post-earnings rally.
The semiconductor rally slowed this week, with Qualcomm shares plunging more than 11% on May 12 and another 6% on May 14 amid broader risk-off sentiment sweeping through semiconductor stocks.
This week’s selloff came after a hotter-than-expected inflation reading and rising tensions tied to the war in Iran pushed oil prices higher, prompting investors to rotate out of high-growth technology names.
For the past few weeks, Wall Street has increasingly focused on semiconductor companies tied to processors, memory chips, and custom silicon beyond traditional graphics processing units.
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Qualcomm is one of those semiconductor companies, famous for its Snapdragon processors and modem chips that power smartphones and self-driving cars.
The stock surged 15.12% on April 30, the trading day after Qualcomm reported fiscal second-quarter results and highlighted its expansion into custom AI chips and data centers, which helped fuel that post-earnings optimism.
Qualcomm is set to enter the data center market
On April 29, Qualcomm reported non-GAAP revenue of $10.6 billion, down 2% year over year, while non-GAAP earnings per share came in at $2.65, down 7%.
Qualcomm management said in the earnings release that the results are in line with guidance and that the company is trying to grab a piece of the data center cake.
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“We are excited by our entry into the data center, where a leading hyperscaler custom silicon engagement is on track for initial shipments later this calendar year,” said CEO Cristiano Amon. He added that the company plans to share more details during its Investor Day on June 24.
That commentary helped spark investor enthusiasm around Qualcomm’s potential gain in the AI race.
But not everyone on Wall Street is convinced of the story.
Wall Street veteran sounds alarm on Qualcomm’s AI rally
Chris Versace, a 30-year Wall Street veteran who oversees TheStreet Pro Portfolio, said he is removing shares of Qualcomm from his bull-stock watchlist.
He said the move was “not so much because of the post-earnings run in the shares, but because of questions that drove that run-up and the continued decline in its Apple (AAPL)-related business,” according to a recent note published on TheStreet Pro.
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Versace noted that Qualcomm management reaffirmed during the earnings call that only 20% of Apple’s smartphones will include Qualcomm chips this year, and that percentage is expected to fall to zero next year. Apple was estimated to account for 22% to 27% of Qualcomm’s total revenue in 2025.
“What led the market to overlook that pending drop was the comment from Qualcomm management that the company entered the custom silicon space and it has a program win with a leading hyperscaler. Initial shipments are slotted for the December quarter,” Versace explained.
Versace also questioned how much manufacturing capacity Qualcomm could secure for AI and data center chips.
“If Apple is shoring up its chip capacity needs with Intel (INTC), we have to question how much capacity is going to be awarded for AI and data center chips from Qualcomm when fabs from the likes of Taiwan Semiconductor (TSM) and others are already serving customers like Nvidia (NVDA), Advanced Micro Devices (AMD), Broadcom (AVGO), and Marvell (MRVL).”
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Versace said the bigger issue is whether Qualcomm can offset the expected decline in Apple revenue and keep fiscal 2027 revenue near the current Wall Street consensus of $42.54 billion. He also noted that earnings-per-share expectations for this year and next remain below the level Qualcomm delivered in 2025.
“It’s hard to get excited about QCOM shares given the risk profile,” Versace said, adding that he plans to revisit the stock following Qualcomm’s June Analyst Day.
Qualcomm stock is up roughly 17% year-to-date.
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