Recent research reports from Goldman Sachs and Bernstein have cast doubt on the growth prospects of Qualcomm (QCOM.US), citing potential risks from sluggish smartphone demand and the loss of orders from Apple (AAPL.US). Goldman Sachs analyst James Schneider initiated coverage on Qualcomm with a "Neutral" rating and a price target of $135. The analyst noted that Qualcomm is leveraging its intellectual property to expand into adjacent markets such as automotive, personal computers, and data centers to diversify its revenue streams. However, Goldman also cautioned that the loss of market share among key smartphone clients, including Apple, could partially offset the benefits of this strategy and may weigh on the company's fundamentals. Earlier, Bernstein downgraded Qualcomm from "Outperform" to "Market Perform," lowering its price target from $175 to $140. The firm indicated that increasing cost pressures related to memory chips, along with price hikes that have had a "significant negative impact" on global smartphone shipments, are key concerns. Bernstein also stated that current market expectations for Qualcomm's performance appear "clearly too high." The firm added that even positive factors such as stock buybacks and expansion in the data center business are unlikely to fully offset the effects of weak smartphone demand. Bernstein further warned that Qualcomm's licensing agreement with Apple may expire within the next year, highlighting a potential risk. Qualcomm specializes in the research, development, and commercialization of core wireless technologies, with operations spanning 3G, 4G, and 5G connectivity, as well as high-performance, low-power computing and on-device artificial intelligence.
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