Qualcomm, to put it mildly, has been on a roll. As emphasized in the company’s recent Investor Day event (on the back of a terrific annual earnings report), all parts of the company’s business are running hot, with particular strength in the automotive market and big momentum just beginning in processors for AI PCs. At the same time, Qualcomm continues to be a dominant player in smartphones, where its growth is easily outpacing the market.
The short version of this story is that over the past few years—and especially since Cristiano Amon became CEO in 2021—Qualcomm has done a knockout job of diversifying beyond mobile devices, such that it is now a significant player in automotive, IoT and even the once-unassailable PC market. Let’s dig in to see what’s happening for this increasingly influential chip giant and where it may be headed next.
Continued Strength In Mobile And Overall
First and foremost, I think the company has done a really good job both in its business performance and the way it talks about it. There’s something compelling about a straightforward presentation of results that boils down to: “Here’s what we said we were going to do, and we did it.” Kudos to Amon and his C-suite for that.
Smartphone silicon is still the meat of Qualcomm’s business, representing $24.9 billion of revenue (out of $39 billion total) for the fiscal year that closed at the end of September 2024. That means 10% year-over-year revenue growth, which is probably 2x the overall growth of the mobile market. But it’s significant that there was another $14 billion of annual revenue for the company outside of handsets, with strong growth in recent quarters for automotive and IoT. Qualcomm has laid out a technology and IP portfolio that you have to be impressed with, and which is obviously gaining great traction in the marketplace—with improved operating margins, earnings per share and so on as proof.
In the mobile market, the company’s newest Snapdragon 8 Elite processors continue to set the tone, with Qualcomm claiming that these processors have the fastest mobile CPUs and NPUs for AI processing. The handsets based on this silicon are already available in China, and their performance aligns with Qualcomm’s claims. We haven’t tested them at Signal65 yet, but hopefully we can do that soon. The company’s expertise in designing chips with great connectivity that operate at low power is also serving it well across other target markets. The center of gravity for computing is bifurcating, where, aside from datacenter AI training, performance per watt is the name of the game.
Qualcomm continues to emphasize strong partnerships, collaborating with a wide range of leading companies across multiple sectors of the tech landscape. This was reflected in the many Investor Day cameos from CEOs including Andy Jassy of Amazon, Satya Nadella of Microsoft, Michael Dell of Dell Technologies, Yuanqing Yang of Lenovo and so on.
Big Design Wins In Automotive
It’s no accident that the non-tech company leaders who made appearances at the event included Ola Källenius of Mercedes-Benz, Wang Chuanfu of BYD and Mary Barra of General Motors. While Qualcomm’s automotive revenue for fiscal 2024 was “only” $2.9 billion, that represents 55% YoY growth for the segment, and the company now has a jaw-dropping $45 billion-plus pipeline with its automotive customers. It’s absolutely incredible to me how quickly the company got traction in advanced driver-assistance systems, as I remember first taking a secret car trip at CES 2019 that was powered by Qualcomm ADAS.
In the years to come we’re going to hear even more about software-defined vehicles. Automobiles—from passenger cars to heavy trucks—are continuing their evolution toward becoming computing platforms on wheels, and Qualcomm is aiding that evolution. Its Snapdragon Digital Chassis integrates AI, safety and infotainment systems, plus the company is heavily involved with telematics and ADAS that enable modern safety measures and autonomous driving. The company is drawing on two decades of experience in automotive, where its expertise in highly connected low-power chips delivers important performance benefits, and it’s easy to predict that this part of Qualcomm’s business will only grow more important over the coming years. What’s less clear is the future of full self-driving autonomy, but robotaxis are a ways away from mass adoption. Regardless, as Qualcomm has demonstrated, if it chooses to enter a space and can win at it, it does.
Industrial IoT Is A Big Target
Qualcomm also continues to scale its industrial IoT solutions across verticals including manufacturing, logistics and healthcare. It’s worth keeping in mind that the company’s definition of “IoT” is expansive, basically including all types of devices besides phone handsets that connect at the network edge. It’s also worth noting that revenues for this part of Qualcomm’s business slipped slightly in fiscal 2024 (from $5.9 billion to $5.4 billion), although growth was strong in Q4 (up 22% YoY), and the company has ambitious plans for this segment going forward.
As my colleague Bill Curtis puts it, “AI brings order to the chaos of IIoT.” The emerging consensus in this area is that the makers of IIoT devices will continue to use a wide range of architectures because of the varied use cases in different industries. In other words, sensors in a hospital are going to work quite differently from sensors in an oil refinery, and that’s not a problem—so long as cloud and edge IT platforms bring order to the chaos, in part by intelligently using AI.
In my view, Qualcomm is extremely well positioned to serve this market, and I’m eager to see what the company will do in the future with AI on the industrial edge. The company is likewise bullish about it, projecting up to $14 billion in annual revenue for IoT by 2029, and $22 billion in combined automotive and IoT revenue in the same timeframe.
Timing and pace at an event like this are significant. The company opened the event with Amazon CEO Andy Jassy discussing the future of warehouses, logistics and transportation. This says that the industrial IoT message is top-of-mind for Qualcomm. It reminds me of where automotive was before the company turned into a $45 billion juggernaut. Qualcomm attempted to buy NXP to fill this slot, was thwarted by China regulators and is now building the capability itself. The long-tail channels and distributors are paramount for scale, but I do believe that Qualcomm will do well with its sweet-spot customers—tech giants like Amazon.
Success With AI PCs, And It’s Still Early Days
My colleagues and I at Moor Insights & Strategy have covered the growth of the AI PC market closely in 2024, and Qualcomm has been deeply involved in that growth—far more so than anyone could have projected even five years ago. A few months back I wrote about the “miracle” the company pulled off with the Snapdragon X platform that powered every single design in the first wave of Copilot+ PCs released this year.
In this context, I want to emphasize how early we still are in the lifecycle for AI PCs. On one hand, the AI PC market is about to shift significantly as AMD and Intel bring their first Copilot+ PC-certified processors to market, which will inevitably carve into Qualcomm’s market share. On the other hand, only a tiny fraction of today’s PCs are AI PCs, but by the end of this decade, probably every PC sold will qualify as an AI PC, so Qualcomm has a lot of room to run. In line with that, at the Investor Day event the company said that it wants to have Snapdragon X chips in more than 100 PC models by 2026—a target I expect it to hit.
If anything, I think the projections that Qualcomm has shared for PCs are conservative. The company’s PC revenue target for 2029 is pegged at $4 billion. Put that in context with recent quarters from AMD and Intel, which total $9 billion-plus. So Qualcomm is citing a number for 2029 that would represent roughly 10% revenue share in 2024, and I think that’s conservative. Obviously, it’s a cutthroat market, but given how well Qualcomm has been executing, I believe it can probably do even more.
Bigger picture, what Qualcomm is building with on-device, edge and cloud AI could be huge. There are obvious benefits of using on-device AI, including lower latency, better efficiency and inherently better privacy/security. What it’s doing with AWS and others to blend edge and cloud capabilities should lower costs for developers and improve AI scalability. The details Amon and his lieutenants shared during Investor Day were great, but in multiple different areas of AI I’m sure the company is only scratching the surface of what will come in the next few years.
Diversification + Discipline = Success
What we’re seeing from Qualcomm is the payoff of a smart diversification strategy that’s been implemented with discipline over the past several years. Five years ago, I was questioning what the company could do with AI and with PCs. To its credit, Qualcomm stepped up, hired some pretty incredible people and leaned into the hard work. Today it has an AI-enabled platform—for phones, PCs, IIoT, automotive—that customers can truly leverage. That’s just really, really smart.
Of course there are some open questions. For one thing, my colleague Anshel Sag will continue to track what Qualcomm does in XR and spatial computing, which has been one of the Next Big Things in tech for a long time without actually paying off yet. Whenever it does, Qualcomm should be at the heart of it.
And although I love what the company is doing on-device and at the network edge, it’s less clear what the strategy is for the datacenter. While we’re at it, I’m also watching closely to see what happens between Arm and Qualcomm on the legal front this month and beyond. At AWS’s recent re:Invent show, the company disclosed that 50% of its new capacity comes from Arm-based Graviton chips. This means 50% Arm and 50% x86. Qualcomm has an incredible core and could leverage this into the datacenter as long as it married it with the right platform and ecosystem. Also, it has placed inference silicon at both AWS and G42, but what could it do if it invested hard there? That may be a bridge too far. Maybe that’s the step after its potential IoT success.
All in all, though, Qualcomm’s vision makes sense to me. It did what it said it would do, and now it’s telling the world what’s next. The markets it’s getting into make sense, given its history and its prowess in intellectual property. And then there’s the potential accelerating effect from AI. Several years ago the company decided that it would never again be so reliant on a single market, and now the moves it has made to support that decision are paying off.
