I’ve been investing in stocks since the early 1990s, and joined Wall Street‘s sell side nearly 30 years ago, so I remember clearly when semiconductor chip stock Qualcomm (QCOM) was the talk of the town.

Long before Nvidia helped win the console wars or became the engine behind AI, Qualcomm was the stock to own in the late 1990s because its CDMA (Code Division Multiple Access) technology became a key standard for 3G networks.

The potential for surging royalty payments sent Qualcomm shares soaring to heights hard to imagine, including a 2619.42% rally in 1999 (shares fell significantly afterwards, declining by double-digit percentages for three consecutive years during the Internet bust).

The company still pockets royalties on its cellular network patents, but most of its sales come from selling chips and modems for smartphones. That was once a fast-growing business, but smartphones have become a commodity owned by everyone, and unit sales have flattened, capping Qualcomm’s revenue growth.

Last year, however, Qualcomm was back in the spotlight again on optimism that AI would finally drive a major upgrade cycle, particularly for Apple iPhones, a significant source of demand for Qualcomm.

Unfortunately, that ‘refresh cycle’ has yet to take off, and given a new memory price boom, Qualcomm could face headwinds for a while longer, according to long-time Wall Street analyst and fund manager Chris Versace. As a result, Versace wrote in a note on TheStreet Pro that he’s sold his Qualcomm shares, moving to the sidelines while he waits for the dust to settle.

Qualcomm faces a series of headwinds in 2026 as memory prices dent demand for PCs, laptops, and smartphones.

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Qualcomm demand could suffer from memory price boom

Growing demand for memory to support hundreds of billions of dollars of new servers for AI data centers has ignited a memory price supercycle. DRAM and NAND spot prices have soared over the past year, and may climb an additional 50% quarter-over-quarter in Q1, according to Counterpoint.

“In late 2025, the global semiconductor ecosystem is experiencing an unprecedented memory chip shortage with knock-on effects for the device manufacturers and end users that could persist well into 2027,” wrote IDC.

The memory price spike is good for memory manufacturers like Micron, but it’s bad news for companies manufacturing PCs, laptops, and smartphones. Demand for memory is outstripping supply, and players like Micron can’t keep up.

As a result, contract prices are surging, adding to manufacturing costs. For now, manufacturers have absorbed the hit, but it’s increasingly likely that they’ll have to boost prices, and if so, that will likely mean fewer units sold and less demand for Qualcomm’s Snapdragon or its modems.

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That dynamic may already be playing out, given Taiwan Semi’s fourth quarter results and comments from contract manufacturing Goliath Foxconn (the maker of the iPhone for Apple).

“On the topic of PC and smartphones, TSM shared it expects “minimal unit growth” due to higher memory prices. That reaffirms our decision to downgrade Qualcomm shares to a Four rating earlier this week and unwind more of that position on Wednesday,” wrote Versace.

On Thursday, Versace used strength to sell the final shares of Qualcomm:

Qualcomm could benefit from Apple AI, but there’s a catch

I’ve been following Apple for years (and I’m a happy shareholder). Under CEO Tim Cook, the company has increasingly shifted toward building and using its own chips and hardware for its devices to reduce its reliance on outside vendors and better control its costs and technology development timelines.

Qualcomm has largely escaped the brunt of Apple’s shift in-house, but that’s changing. The company’s contract to supply Apple with modems wraps up in 2028, posing a big risk to revenue. Apple has historically accounted for 20% to 25% of Qualcomm’s sales.

“Apple’s in-house C1 modem is a critical milestone on its cellular modem roadmap and a good indicator of where Apple is in its product development timeline,” wrote Futurum. “As one of Qualcomm’s largest cellular modem customers, Apple’s exit from that agreement is expected to create a >$7B annual revenue hole in Qualcomm’s balance sheet.”

Qualcomm is trying to mitigate the damage by expanding into other growth markets, including automotive and Internet of Things, and it recently acquired Alphawave Semi to bulk up its chances in artificial intelligence. Still, a winding down of Apple’s revenue represents a major headwind over the coming years.

In the short term, Apple unit volume could get a boost in 2026 depending on how the launch of its Google-powered AI version of Siri goes (a rollout it expected this spring). That could be good for Qualcomm, but there’s certainly a risk that Apple AI underwhelms relative to what’s already available from ChatGPT, Anthropic, and Google itself.

Versace isn’t giving up on Qualcomm altogether though. While he’s sold it from the portfolio, he plans to keep a sharp eye on how Apple’s launch goes, and may decide to buy it back later this year.

“Given our thoughts on consumer AI adoption, we will place Qualcomm in the Bullpen and look to revisit the shares mid-2026,” said Versace.

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