Qualcomm Faces a Double Squeeze: Disappointing Guidance and an Escalating Arm Investigation

Qualcomm finds itself navigating a rare convergence of strategic storms. After a blistering 30-day rally that pushed its stock up more than 50%, the shares have reversed sharply over the past week as a weak quarterly outlook collides with a deepening antitrust probe involving its key architecture supplier, Arm. The stock recently changed hands at around 173–176 euros, a far cry from the 52-week high of 201.90 euros hit just weeks ago.

The immediate trigger for the pullback was management’s forecast for the third fiscal quarter. Qualcomm guided for earnings per share of no more than $2.30 and revenue capped at $10 billion — both figures that missed analyst expectations. Major Wall Street banks reacted swiftly. JPMorgan, UBS and Barclays all cut their ratings, while Freedom Broker moved to “Hold,” citing persistent weakness in the smartphone market. The firm’s mobile-chip revenue is now expected to shrink by roughly 15% annually through 2027, and analysts see no short-term catalyst to reverse that trend.

A structural headwind amplifies the cyclical slowdown: Apple is weaning itself off Qualcomm modems. The iPhone maker now uses its own C1 chips in models such as the iPhone 16e and the iPad Pro. Chief Executive Cristiano Amon acknowledged that by 2026, Qualcomm will supply modems for only one in five iPhones, and by 2027 that share could fall to zero. With the Android market also stagnating, the company faces a gap that its nascent PC business — already coming under pressure from Nvidia — may be hard-pressed to fill.

Yet the picture is not uniformly bleak. Qualcomm’s automotive chip division posted a 38% jump in revenue to a record $1.3 billion, pushing the unit past an annualized run rate of $5 billion for the first time. On the diplomatic front, Amon recently joined a US business delegation to Beijing, underscoring the importance of China as the company’s largest market for both chips and licensing. Any easing of trade tensions could stabilize supply chains and unlock new contracts.

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Against this commercial backdrop, a regulatory drama is unfolding that could ultimately reshape Qualcomm’s cost structure and competitive position. The US Federal Trade Commission has opened a formal antitrust investigation into Arm Holdings — an inquiry triggered directly by Qualcomm. In March 2025, Qualcomm filed simultaneous competition complaints with the FTC, the European Commission and South Korea’s antitrust authority, alleging that Arm was abusing its dominant position as a licensor of chip architectures while simultaneously selling its own processors.

The conflict escalated dramatically last March when Arm unveiled its own AGI processor for data centers, effectively transforming itself from a neutral technology supplier into a direct competitor. Regulators outside the US are already moving: South Korea’s competition agency raided Arm’s Seoul office without warning in November 2025, and the European Commission has opened a separate case.

Arm has dismissed Qualcomm’s accusations as “baseless” and a “desperate attempt” to gain leverage in a commercial dispute. But Qualcomm has already notched legal victories: it won a licensing lawsuit against Arm outright, and a subsequent motion for a retrial was denied. Qualcomm’s own counterclaim for breach of contract and interference with customer relationships was headed toward trial in early 2026.

Qualcomm at a turning point? This analysis reveals what investors need to know now.

The stock’s current valuation reflects the uncertainty. Qualcomm trades at a forward price-to-earnings multiple of 18.7x — above its five-year average but well below the sector median of 24.2x. Analysts remain deeply split, with nine buy ratings, 18 holds and four sells. Until segments like automotive and IoT contribute a materially larger share of revenue, most strategists are taking a wait-and-see approach.

If the FTC investigation results in a ruling that forces Arm to keep its licensing terms open, Qualcomm would gain long-term supply security and pricing relief. But antitrust cases of this magnitude typically drag on for years. In the meantime, the company must manage the Apple revenue hole, the smartphone downturn and the Arm litigation — a balancing act that leaves little room for error.

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