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On November 5th, 2024, JP Morgan cut its price target for Qualcomm Inc (Nasdaq: QCOM) from $210 to $195, citing ongoing challenges in the smartphone market.

Analyst Samik Chatterjee expressed concerns over fading inventory replenishments by Chinese smartphone OEMs, along with Qualcomm’s lost revenue from Huawei and Apple’s shift towards in-house modem chips.

Despite maintaining an Overweight rating, JP Morgan highlighted potential downside risks for fiscal 2025 EPS projections, predicting a 6% reduction in consensus estimates.

Qualcomm Q4 earnings projections signal optimism

Qualcomm’s upcoming Q4 earnings report is set for November 6th, with analysts projecting an EPS of $2.57 on revenues of $9.93 billion.

This marks a notable improvement from the previous year’s $2.06 EPS and $8.61 billion in revenue.

Impressively, all five analysts covering Qualcomm on Wall Street have raised their EPS forecasts in the past 90 days, reflecting a cautiously optimistic stance despite broader market uncertainties.

Legal dispute with arm escalates

Qualcomm faces a potential disruption as Arm Holdings seeks to terminate a critical architectural license agreement. This conflict stems from Qualcomm’s acquisition of Nuvia and the subsequent use of its designs in Snapdragon chips.

If unresolved, this could jeopardize Qualcomm’s ability to produce key processors for Android smartphones. The dispute, with court proceedings set for December, underscores the fragility of Qualcomm’s reliance on Arm’s technology.

Diversification efforts in automotive and AI

Amid these challenges, Qualcomm continues to expand its footprint in the automotive sector with its Snapdragon Cockpit Elite and Ride Elite platforms.

These offerings, part of the Snapdragon Digital Chassis, aim to enhance vehicle infotainment and autonomous driving capabilities. Qualcomm’s push into automotive AI positions it strategically as vehicles increasingly integrate advanced computing features.

Additionally, the Snapdragon 8 Elite system-on-a-chip, featuring the Oryon CPU, marks a leap in performance for AI-driven applications in mobile devices.

Qualcomm stock: valuation metrics and market sentiment

Qualcomm currently trades at a forward P/E ratio of approximately 15x its FY25 EPS estimate of $11+. This valuation appears attractive, especially given the company’s potential for growth in AI and automotive segments.

While its core smartphone business faces hurdles, Qualcomm’s diversified growth avenues offer a compelling risk-reward balance for long-term investors. The stock’s de-risked valuation, as highlighted by JP Morgan, could cushion near-term volatility.

Beyond immediate earnings and market reactions, Qualcomm’s strategic moves, such as its potential acquisition of Intel, will be closely watched. The company’s decision-making post-US presidential elections could significantly influence its growth trajectory and competitive positioning in the semiconductor industry.

As Qualcomm navigates these multifaceted dynamics, the stock’s future trajectory will be shaped by its ability to manage market pressures, leverage new growth opportunities, and resolve ongoing disputes.

This brings us to the next critical aspect: assessing Qualcomm’s stock performance through a technical lens to better understand its price movements and potential breakout points.

QCOM stock: $151 acting as support

Qualcomm’s stock more than doubled from $106 to above $230.63 between October 2023 and June 2024, but has retraced significantly from that high since then.

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Source: TradingView

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