Not Just Smartphone Chips! Qualcomm's AI Value May Be Underestimated by Wall Street, Research Firm Foresees Explosion by 2029

Qualcomm (QCOM-US) has long been categorized by the market as a 'smartphone chipmaker' due to the slowing growth of the smartphone market in recent years. However, research firm Citrini Research believes Wall Street may be underestimating Qualcomm's long-term potential in the AI infrastructure market. The firm points out that Qualcomm is actively expanding into AI data centers through its new High Bandwidth Compute (HBC) architecture, strategic acquisitions, and support from major cloud customers, positioning itself to become a key competitor in the AI infrastructure space.

The AI semiconductor market has already established clear divisions: NVIDIA (NVDA-US) dominates the AI accelerator market, Micron (MU-US) benefits from high-bandwidth memory (HBM) demand, and Broadcom (AVGO-US) holds an advantage in AI networking chips. In contrast, Qualcomm is still widely viewed by investors as a company whose core business revolves around smartphone chips.

However, Citrini Research notes in its latest semiconductor research report that Qualcomm's transformation goes far beyond market perception. Its true goal is not simply to launch another AI accelerator, but to address one of the core bottlenecks currently facing AI data centers—the so-called 'memory wall'.

The 'memory wall' refers to the phenomenon where, despite rapid improvements in AI processor performance in recent years, the speed of data transfer between memory and processors has failed to keep pace, limiting overall AI computing efficiency. The market currently relies on high-bandwidth memory (HBM) to improve transmission efficiency, but rising HBM costs have prompted the industry to seek alternative solutions.

Citrini believes Qualcomm's newly introduced HBC architecture is a potential solution. Unlike current reliance on HBM packaging, Qualcomm places computing cores directly beneath LPDDR memory, significantly shortening data transmission distances while reducing dependence on expensive advanced packaging technologies.

Qualcomm executive Tony Pialis stated that the new architecture can enhance memory bandwidth efficiency while lowering power consumption. If the technology matures successfully, Qualcomm won't just be launching another AI chip—it could gain access to one of the most costly aspects of AI data centers.

Citrini points out that the market is still overly focused on Qualcomm's short-term financial performance, while the real focus should be on its long-term development from 2028 to 2029.

Although Qualcomm's AI data center business is still in its early stages—launching its AI200 system this year, with large-scale deployments by hyperscalers expected in the latter half of this decade—the semiconductor industry has always reflected multi-year profitability rather than next-quarter earnings. Therefore, 2028 to 2029 is the key evaluation period.

The firm believes Qualcomm doesn't need to immediately generate billions in AI revenue but must gradually build market confidence in its AI business.

To accelerate its strategy, Qualcomm has continued expanding its AI footprint through acquisitions in recent years. The company completed a $2.3 billion acquisition of Alphawave in December last year and announced a $3.9 billion acquisition of AI software firm Modular this June, strengthening its capabilities in high-speed interconnects and AI software.

Additionally, Microsoft (MSFT-US) has committed to deploying AI accelerators built on the HBC architecture, becoming one of Qualcomm's key customers in advancing its AI data center initiatives.

Qualcomm's management forecasts that data center business revenue will grow dramatically from approximately $300 million this year to over $15 billion in the 2029 fiscal year, reflecting strong confidence in the AI infrastructure market.

According to Wall Street analyst ratings compiled by Benzinga, the market maintains a 'Neutral' consensus on Qualcomm, with an average target price of $207.93—about 22% upside from the July 22 closing price of $171.11. Individual target prices range from $100 to $300.

Qualcomm is scheduled to report its fiscal 2026 third-quarter earnings on July 29. In addition to smartphone chip demand, the market will closely watch its AI data center strategy, HBC technology progress, and management's outlook for future AI business, as investors assess whether the company can further shift perceptions away from its 'smartphone chipmaker' image.