Take a look at some of the recent headlines for Qualcomm (NASDAQ:QCOM), and it may seem as if things are looking up for the mobile chip company. However, upon closer inspection, it’s clear that QCOM stock isn’t going to enter “comeback mode” anytime soon.

Why? For one, while there has been some promising news, certain key challenges persist. These will likely keep affecting the company’s fiscal performance.

If this simply meant that Qualcomm was likely to stay stuck in its current trading range, admittedly this wouldn’t be a massive dealbreaker.

For patient investors, waiting out an extended period of middling performance could pay off in time, as longer-term catalysts played out. Yet while QCOM may have such a catalyst, it is still far from certain whether this is truly the case.

With this, let’s dive in, and see why the story here hasn’t changed.

QCOM Stock: Small Positives, Looming Negatives

About three weeks ago, there was a new development with Qualcomm, which sounded like a big deal at first, but undoubtedly “small potatoes.” I’m talking about the extension of Qualcomm’s chip supply agreement with its largest customer, Apple (NASDAQ:AAPL).

This supply deal was supposed to soon end, yet now has been extended through 2026. QCOM stock rallied for several days on the heels of news.

However, shares have since given back most of these gains. Sure, one can chalk this up to the latest round of volatility in the stock market, as investors start to accept the prospect of interest rates staying “higher for longer.”

However, alongside renewed concerns about high interest rates, it’s possible that investors also realize that this extension doesn’t really improve Qualcomm’s long-term prospects. The company is still facing the loss of around a quarter of its business.

Meanwhile, mobile chip demand across-the-board remains weak, and Qualcomm is also contending with the loss of another major customer (Chinese smartphone maker Huawei).

If that’s not bad enough, a would-be catalyst for the company may fail to have much of an impact in the foreseeable future.

AI Catalysts Won’t Arrive Fast Enough

Many of those bullish on QCOM stock believe AI could save the day, helping to  get shares back on their way toward higher prices.

While there’s nothing wrong with hoping for such a positive outcome, I wouldn’t bank on it happening. Instead of AI-related growth outweighing challenges like customer losses and weak demand, chances are it will be the other way around. Sure, Qualcomm may have some promising AI-related projects in the works.

The company is developing AI chips for mobile devices. Qualcomm even has plans to capture a greater share of the automotive chip market, by tapping into growing demand for AI capabilities in vehicles.

As I discussed back in July, it’s going to take quite some time before these projects begin to have a real impact on the company’s bottom line.

Until then? A continued slump in mobile chip demand, coupled with the recent loss of Huawei as a customer, could mean more disappointment ahead with future results. In turn, a further price decline for shares.

The Verdict

Trading for only 13.2 times earnings, I’ll concede that QS isn’t as vulnerable to multiple compression as pricier names with similarly weak fundamentals. However, keep in mind that if earnings keep dropping, shares will make a corresponding move lower.

That’s the risk with going contrarian with Qualcomm as an AI play. Down the road, the company may just well capitalize on the mass adoption of AI technology.

The issue is that the resultant gain may fail to make up for your initial losses.

There may be a silver lining to the Apple situation. Further extensions of the supply deal may be possible, if rumors about Apple facing challenges in bringing chip production in-house prove true. However, I would wait for confirmation of these rumors.

Not yet out of the woods, there’s little reason to jump into QCOM stock today.

QCOM stock earns a D rating in Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.