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Qualcomm Set for Solid Growth Despite Apple Concerns
Stock Analysis & Ideas

Qualcomm Set for Solid Growth Despite Apple Concerns

Wireless telecom giant Qualcomm (QCOM) is benefiting from a ramp-up in 5G-enabled semiconductor chips.

The company hosted an Analyst Day conference Tuesday where management demonstrated Qualcomm’s diversified growth strategies planned for the coming years. Notably, technologies like 5G, RF front end control interface (RFFE), automotive chips, and Internet of Things (IoT), are expected to receive the most attention from the company in the forthcoming years.

Importantly, management also mentioned that the company’s total addressable market (TAM) should grow up to seven times over the next 10 years. (See Analysts’ Top Stocks on TipRanks)

According to Qualcomm, the Android market holds the richest opportunities to grow revenues and margins. This spells good news for Qualcomm, which has won design wins across premium and high-tier handsets from the likes of Xiaomi, Honor, Vivo, Oppo, and Samsung.

Moreover, Qualcomm is among the top RFFE vendors on the handset market, having shipped 8 billion total RFFE units in FY21.

Expert Weighs In

Following the event, Susquehanna analyst Christopher Rolland reiterated a Hold rating on Qualcomm but raised its price target to $175 from $157.

Rolland believes that the company has set a “cutting-edge” cellular standard by constantly updating its technologies. Moreover, the company is positioned to enjoy the early bird benefits of a new 5G upgrade cycle.

However, the analyst is concerned about the lack of innovation in technologies, which is leading to longer replacement cycles and lower unit growth. Again, Apple (AAPL) is looking at insourcing the development of modem and RF over time instead of sourcing them from Qualcomm. This is definitely a threat to Qualcomm’s top line.

Wall Street’s Stance

Wall Street analyst consensus is cautiously optimistic towards Qualcomm, with a Moderate Buy rating based on 12 Buys and seven Holds. The average Qualcomm price target of $189.25 indicates an upside potential of 1.8%.

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Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.

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