The ascent of artificial intelligence (AI) in various industries has captured investors’ attention in recent times. Considered a technological marvel of the modern era, AI is poised to revolutionize daily life across the globe in the foreseeable future.
Central to the AI revolution are specialized semiconductor chips, critical components in the computational infrastructure required for advanced AI applications. With the semiconductor market projected to swell to $1.13 trillion by 2033, semiconductors are akin to the “shovels” unearthing the AI “gold rush.”
The Case for Qualcomm amidst the AI Craze
While tech giants like Nvidia and Advanced Micro Devices have garnered significant attention in the AI chip sector, longstanding semiconductor player Qualcomm should not be dismissed as the next frontier for AI implementation in devices.
Delving into Qualcomm’s Stock Performance
Established in 1985 and headquartered in San Diego, Qualcomm Inc (QCOM) specializes in designing and licensing semiconductor chips for mobile and wireless communication devices. The company, valued at a staggering $182 billion, has seen its stock surge by 15% year-to-date, outpacing the tech-heavy Nasdaq-100 Index’s 10.5% rise.
Despite this robust performance, Qualcomm’s stock remains attractively priced with a forward adjusted earnings multiple of 16.86x, presenting a discount compared to sector medians. Moreover, Qualcomm boasts a dividend yield of 1.96%, surpassing the tech sector average, and has raised its dividend annually for two decades.
Analyzing Qualcomm’s Growth Trajectory
Qualcomm’s recent fiscal first-quarter results exceeded market expectations, with revenues reaching $9.9 billion, a 5% increase from the prior year. The company’s core QCT business saw a 7% growth to $8.4 billion, driven by improved scale, product mix, and operational efficiency.
Looking ahead, analysts forecast a 15.7% earnings growth for fiscal 2024 and anticipate revenue to increase by 6.14% in the same year, fueled by Qualcomm’s strategic initiatives and market positioning.
Qualcomm’s Strategic Positioning in the AI Landscape
Qualcomm is primed to benefit from the mainstreaming of AI applications, particularly with large-scale deployment on various devices. The company’s extended licensing agreements with key partners like Apple and Chinese OEMs underscore its pivotal role in the industry.
Moreover, Qualcomm’s recent product developments like the Snapdragon 8 Gen 3 Mobile platform and collaborations with industry leaders like Samsung and Google signify its commitment to enhancing AI capabilities across diverse platforms.
Analysts’ Outlook on Qualcomm Stock
Market analysts maintain a “Moderate Buy” rating for Qualcomm stock, with a majority forecasting upward growth potential. The average target price stands at $150.38, with some analysts projecting a target price as high as $180, representing a substantial upside from current levels.
