Investing.com -- Bank of America has reinstated coverage of Qualcomm with an Underperform rating, saying the semiconductor company faces limited upside due to muted growth prospects and growing competitive pressures across its core markets.

The bank set a $145 price objective, implying roughly 5% upside from Monday’s closing price.

“We reinstate coverage of Qualcomm with an Underperform rating and a $145 PO due to lukewarm +2%/+1% sales/EPS CY25-28E CAGR vs. semis at +17%,” analyst Vivek Arya said.

“QCOM is a leader in smartphone processors but it’s a mature industry with downside risks from rising memory prices and QCOM’s well-known imminent ~$7-8bn loss of Apple business,” he added.

Arya said that the chipmaker “has diversified into auto/IoT and plans to enter AI data center, but benefits could be insufficient to offset mobile headwinds.”

The analyst noted that Qualcomm’s modems are expected to be completely phased out of iPhones by fall 2027 as Apple shifts to internally designed chips.

At the same time, other major customers are increasingly investing in their own semiconductor capabilities. Samsung is expected to reduce Qualcomm’s share in Galaxy devices from 100% to roughly 75%, while Xiaomi has committed around $7 billion toward developing internal silicon.

Arya also flagged the company’s reliance on a small group of major customers as a key risk. Apple, Samsung and Xiaomi together accounted for roughly 54% of Qualcomm’s revenue in fiscal 2025.

Although Qualcomm has been expanding into automotive and Internet-of-Things (IoT) chips, Arya believes those areas may not fully offset headwinds in the mobile segment.

Still, these businesses remain one of the company’s main diversification drivers, with auto and IoT chipset revenue projected to grow at roughly a 19% compound annual rate to about $17.7 billion by fiscal 2028.

The analyst also pointed to Qualcomm’s ambitions in AI infrastructure as a potential upside catalyst, though it sees the opportunity as limited in a crowded competitive landscape.

Even if Qualcomm captures 10% to 20% of the ARM-based server CPU market, Arya estimates this could translate into only $1-2 billion in revenue and roughly $0.20-$0.40 in incremental earnings per share.