Qualcomm (NASDAQ: QCOM) is a fabless semiconductor that focuses mainly on handset device chips but is creating other revenue streams such as automotive, pc, server and extended reality chips.
Revenue FY2024 compared to a year earlier:
Handsets: +10% to $24.9b
“Our recently unveiled Snapdragon® 8 Elite has shown strong design traction,
with successful launches at Xiaomi, Honor, Oppo and Vivo, and we look forward
to additional launches at Samsung, ASUS and more.”
Automotive: 55% to $2.9b
“We are pleased that leading car manufacturers are adopting Snapdragon Elite
automotive platforms for their future software-defined vehicles, including Li
Auto and Mercedes-Benz.”
IoT: -9% to $5.4b
“In PCs, we are pleased that leading OEMs, including Dell, HP, Lenovo, Samsung,
Acer and ASUS, will all have devices powered by our Snapdragon® X Plus 8-core
platform. We now have 58 platforms launched or in development across the X Series
portfolio.”
“In Industrial, our Qualcomm® IoT Solutions Framework helps enterprises build
solutions that enable easy development of end-to-end applications, reduce time to
implementation, and improve operational efficiencies.”
On a year-over-year basis, Qualcomm’s guidance suggests that its revenue is on track to increase by 10%, while earnings would increase by 7%. It has been in the news lately over a spat with apple about modems in its mobile phones.
“Apple’s goal is to eventually surpass Qualcomm’s modem capabilities, but this is not expected to happen until 2027 due to Qualcomm’s extensive patent portfolio. The transition will likely be gradual, with Qualcomm modems still featuring in some devices until at least March 2027, and Apple continuing to pay royalties to Qualcomm.”
“Qualcomm anticipates expanding into new markets will generate an additional
$22 billion annually by 2029”
PC chips: $4b
Automotive: $8b
Industrial chips: $4b
Headsets: $2b
Other chips: $4b
CEO: Qualcomm assures that its expanding businesses would more than offset any potential losses from Apple.
Qualcomm is also set to benefit from the rollout of advanced-artificial intelligence in handsets. Industry. “…growing generative AI smartphone market, … is expected to clock 78% annual growth through 2028.”
Qualcomm boasts a trailing P/E ratio of 17, according to SimplyWallSt, the average P/E ratio in the semiconductor industry is 66.5 and a 3-year average of 39.6.
Other statistics for Qualcomm:
Return on equity: 42%
Revenue (ttm): $39bn
Net income (ttm): $10bn
Cash: $13bn
Debt: $15bn
Levered Free Cash Flow (ttm): $8.92bn
Dividend: 2% with 36% payout ratio
52-week range: $134.94 – $230.63
Current price: $157.50
By these metrics, Qualcomm is undervalued, generates lots of cash which it will use pursue extensive acquisitions and product fortifications, has a strong balance sheet with high margins.
*Disclosure*
I own and recommend shares of Qualcomm.
Devlin Demontigny 