Key insights
- Bank of America identifies leading consumer chip stocks amid persistent weakness in smartphone demand, potentially lasting until 2027. Qualcomm and Skyworks Solutions are highlighted, with BofA setting price objectives and outlining risks and upside potentials. Qualcomm faces modem roll-off and competition, but could benefit from auto, IoT, and AI growth. Skyworks' valuation is also discussed. The sector's outlook is tied to memory price stabilization and diversification efforts.
Investing.com -- Bank of America has identified leading consumer semiconductor chip stocks as the sector faces continued headwinds from sluggish smartphone demand that could persist into 2027 unless memory prices stabilize.
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The consumer chip sector remains under pressure as phone sales stay weak, creating challenges for semiconductor manufacturers heavily exposed to mobile devices. Bank of America’s analysis highlights companies positioned to navigate these difficult market conditions through diversification strategies and emerging technology opportunities.
- Qualcomm (NASDAQ:QCOM)
Bank of America sets a price objective of $145 for Qualcomm, based on 13 times its 2027 estimated non-GAAP earnings per share of $11.55, excluding stock-based compensation. The firm applies a discount to diversified and analog peers due to Qualcomm’s more muted growth outlook and limited exposure to data center infrastructure buildout.
Downside risks include modem roll-off from its top customer worth $7-8 billion by fall 2027, potential share loss at a key Android customer, customer insourcing, licensing renewal risk in the first half of 2027, China exposure, and competition in the crowded AI data center market. Upside potential comes from auto and IoT diversification toward a $22 billion fiscal 2029 target, AI inference accelerators, Nuvia ARM CPUs, premium mix shift, and rising on-device AI content.
Qualcomm recently received analyst upgrades from both Bernstein and Tigress Financial Partners, with the firms citing growth opportunities in AI-enabled smartphones, automotive, and IoT markets. Tigress Financial also noted the company’s new $20 billion share buyback program.
- Skyworks Solutions (NASDAQ:SWKS)
Bank of America assigns a $60 price objective to Skyworks Solutions, based on 11 times its 2027 estimated price-to-earnings ratio, excluding stock compensation expense. The valuation falls within the historical 8-22 times range and reflects a balance between sector re-rating and AI smartphone tailwinds against merger overhang and iPhone 17 content loss.
Upside risks include market share gains, sustained boost from 5G adoption, semiconductor industry consolidation, unique merger and acquisition opportunities fueling stronger growth, and execution on the proposed merger with Qorvo. Downside risks center on share loss from Apple, which represents 70% of sales, stronger than expected decline in smartphone units year-over-year, and faster than expected average selling price degradation given muted pricing power.
In recent news, Skyworks Solutions reported second-quarter fiscal 2026 results that surpassed analyst forecasts, with revenue of $944 million and earnings per share of $1.15. The company also filed updated financial statements with the SEC related to its planned acquisition of Qorvo.
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