Qualcomm's Memory Crisis Deepens as Guidance Cut Tests Transition Timeline

What happened

Qualcomm's stock plunged nearly 9% to $136 on February 5, 2026, after management slashed forward guidance, citing a global DRAM shortage driven by AI data center demand that is forcing smartphone OEMs to cut production. This aligns with the DeepValue report's bear scenario, where persistent memory constraints from capacity shifts to HBM compress handset revenue and mask underlying demand. Management has framed the weakness as supply-driven, guiding QCT handset revenue to around $6B next quarter, but this obscures the critical need for diversification offsets to counter Apple's looming modem share loss. The report's valuation analysis at 29.5x P/E assumes a smooth transition, yet this guidance cut highlights execution risks and delays in proving new growth legs like automotive and AI-PC. Investors now face a pressured narrative where the memory crisis amplifies existing headwinds, making near-term checkpoints on automotive growth and Snapdragon X2 shipments even more pivotal.

Implication

The guidance cut validates the report's bear case, where DRAM shortages persist, pushing the stock below the $140 attractive entry point and signaling market skepticism about Qualcomm's near-term resilience. With handset revenue pinned near $6B, investors lose visibility into underlying demand, increasing reliance on automotive growth exceeding 35% YoY and timely Snapdragon X2 shipments to uphold the transition thesis. Failure to meet these milestones could trigger a rerating toward the $115 bear scenario value, as memory issues delay diversification proofs and exacerbate Apple overhang risks. Monitoring management's ability to attribute softness solely to supply constraints over the next 90 days is crucial; any shift in narrative would indicate deeper demand problems. Ultimately, patience is warranted until concrete evidence emerges that handset recovery and new growth legs materialize as planned, reducing reliance on a premium multiple.

Thesis delta

The new article reinforces the DeepValue report's thesis that memory constraints are a critical near-term risk, but does not shift the core 'WAIT' rating. It underscores the urgency for Qualcomm to prove diversification offsets before Apple's modem rollout accelerates, with the stock drop to $136 offering a potential entry only if supply issues resolve swiftly and guidance is met. No fundamental change is warranted, yet the heightened scrutiny on execution timelines demands closer monitoring of automotive growth and PC shipment schedules.