Qualcomm (NASDAQ:QCOM) shares dropped more than 8% on Wednesday after HSBC downgraded the company to Hold, expressing caution due to a lack of catalysts and a less optimistic outlook on the AI PC market. The target price was slightly raised to $200 from $190, but analysts remain wary about the stock’s near-term prospects.

HSBC predicts Qualcomm’s Q3/24 results will align with consensus estimates, expecting revenue of $9.3 billion, just above the consensus of $9.2 billion. The gross margin for Q3/24 is forecasted at 55.9%, slightly below the Street estimate of 56.1%.

Looking ahead to Q4/24, HSBC foresees revenue remaining flat at $9.3 billion, falling short of the consensus estimate of $9.8 billion due to anticipated lower handset revenue. The gross margin for Q4 is projected to drop to 55.6%, compared to the consensus of 55.9%.

HSBC points to ongoing uncertainties in the smartphone market, particularly with a projected 15% quarter-over-quarter decline in China’s Android handset market.

Additionally, the rollout of the 3nm-based Snapdragon Gen 4 is expected to pressure gross margins as higher costs outpace the average selling price premium. Potential unit shipment losses from 4G SoCs at Huawei also contribute to the cautious outlook.