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SUMMARY
Parkev Tatevosian, CFA, analyzes Qualcomm's recent stock performance and its evolving position in the technology market. The discussion centers on the company's financial results, future growth opportunities in AI, and the implications for long-term investors.
MAIN POINTS
- Qualcomm's stock has risen from $125 to $200 per share, prompting a review of its current valuation and outlook.
- Despite recent revenue struggles due to smartphone market headwinds, Qualcomm is positioned for growth as AI capabilities drive device upgrades.
- The company anticipates significant value from agentic AI workloads and highlights its leading CPU performance across multiple sectors.
- Recent quarters have seen a renewed importance of CPUs and memory in data centers, benefiting Qualcomm alongside continued relevance of GPUs.
- Qualcomm reports a step function increase in strategic customer engagement, indicating larger deals and expanded market opportunities.
- Based on updated forecasts, Qualcomm is valued at $232 per share, with a reiterated top 15 stock rating and continued optimism for long-term investors.
DETAILED ANALYSIS
Qualcomm has experienced a significant increase in its stock price, rising from approximately $125 to $200 per share, reflecting strong investor confidence. The company recently reported quarterly revenue of $10.6 billion and non-GAAP earnings per share of $2.65. While these figures indicate some challenges, particularly with revenue growth hampered by headwinds in the smartphone market and higher memory prices, the long-term outlook remains positive.
The primary driver of optimism is the anticipated wave of device upgrades as artificial intelligence capabilities become more central to consumer and enterprise technology. Qualcomm's management emphasizes that most existing devices are not equipped for advanced AI functions, creating a substantial upgrade cycle for both smartphones and personal computers—a segment where Qualcomm has recently expanded and is achieving notable success.
The company is also positioned to benefit from the increasing importance of agentic AI workloads, which rely heavily on CPU performance. Qualcomm claims industry-leading CPU capabilities across smartphones, PCs, automotive, and soon, data centers. This trend is supported by broader industry movements, as data center operators are once again prioritizing CPUs and memory alongside GPUs, reversing a recent period where GPUs dominated due to the AI boom.
The diversification of critical components in data centers enhances Qualcomm's opportunities, especially as the company reports a step function increase in strategic customer engagement. This means not just incremental growth, but a substantial leap in both the number and scale of deals being discussed, with management citing examples of deal sizes rising from the billion-dollar range to as much as $5–10 billion.
Incorporating these developments, the long-term valuation for Qualcomm has been raised to $232 per share, compared to the current market price of $210. The stock remains one of the top 15 recommended investments, with continued strong prospects for long-term growth as the company stands at the forefront of a major technological shift driven by AI.
LINKS
- YouTube channel membership for exclusive perks and early access.
- Special offer for The Motley Fool Stock Advisor.
- Parkev Tatevosian's book on a 6-step investing framework.
- Fiscal.ai investment research tool with a viewer discount.
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