QCOM’s Brutal Fall Amid Chip Pullback On Inflationary Pressure Sparks Retail Buy Calls

• QCOM dropped 11.5% and was the worst performer in the S&P 500 on Tuesday.
• The consumer price index for April rose 3.8% from a year ago, the most since 2023, on the back of soaring fuel prices, new data released on Tuesday showed.
• Last month, Qualcomm discussed its entry into the AI data center market, including a contract win from a hyperscale customer. More details are expected at the company’s investor day event next month.

Qualcomm, Inc. emerged as an unexpected casualty of Tuesday’s tech selloff, triggered by a hotter-than-expected inflation reading, although traders largely viewed the pullback as a buying opportunity.

QCOM stock dropped 11.5%, its worst single-day slide in six years, and was the biggest loser on the S&P 500. Until Monday, the stock had climbed 52% in just eight sessions since the company’s quarterly report on April 22.

On Stocktwits, retail sentiment for QCOM edged higher into the ‘bullish’ zone amid ‘high’ message volume, with several traders advising a buy on the dip.

“$QCOM way over done, been buying all morning,” said a trader. Another wrote that they “bought a bunch at 205 and 210 and 215 this one’s going 300+ it might take a few months but it’ll get there.”

“QCOM This is typical, This is how you miss the boat. They tank these stocks 20% and scare some people out of their shares. Then the next day you wake up and the stock is up 15-20% in the pre market for really no reason… That’s why we buy the dip!! Lets see if they do it again,” said a trader.

Iran War Fuels Inflation, Market Drops

The S&P 500 and Nasdaq declined on Tuesday after the latest data highlighted that the conflict in Iran is fueling a resurgence in inflation. The consumer price index for April rose 3.8% from a year ago, the most since 2023, on the back of soaring fuel prices.

Separately, real wages, adjusted for inflation, declined year over year in April, marking the first such contraction since 2023.

The economic print sent investors into risk-off mode and pressured tech stocks – and particularly chip stocks – more than other sectors. Intel and SanDisk dropped by over 6%. Western Digital, NXP Semiconductors, and Micron declined by 3.6% to 5.3%, while Oracle and Salesforce dropped by around 3.5%.

QCOM’s Data Center Momentum

Qualcomm has been high on investors’ radar lately after the smartphone chipmaker announced plans to enter the lucrative smartphone market last month. The company said it had secured a deal with an undisclosed hyperscaler and planned to start shipping in the December quarter.

Qualcomm is largely expected to share more about its data center growth plans at its upcoming investor day on June 24.

“With the company’s recent datacenter announcements setting up a chance for Qualcomm to silence its critics with a combination of datacenter wins, roadmap announcements, and clarity on how its DC business is setup to be its next $10+ billion annual revenue stream,” Daniel Newman, CEO of The Futurum Group, said on X.

“AI demand opened the door for Qualcomm, execution gives it permission to win a share of more than what will be a trillion+ of annual AI chip spend.”

In the last quarter, Qualcomm’s revenue rose 3% to $10.6 billion, in line with expectations. The current quarter forecast of $9.2 billion to $10 billion was, however, below analysts’ $10.19 billion target.

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