On Tuesday, Susquehanna reaffirmed its positive stance on Qualcomm (NASDAQ: NASDAQ:QCOM) shares, although the price target was reduced to $210 from the former $230. This adjustment follows Qualcomm's Investor Day in New York, where the company presented its strategic outlook and growth opportunities.
Qualcomm unveiled an increased total addressable market (TAM) projection of approximately $900 billion by 2030, with edge AI expected to drive the shipment of 50 billion connected edge devices by the end of the decade.
The company also reported having 58 designs either in production or development for the Snapdragon X PC platform, with plans to expand this number to over 100. Moreover, Qualcomm is widening its Snapdragon X PC roadmap to include entry-level devices starting at $600.
During the event, Qualcomm introduced the second generation of its Oryon processor for premium mobile devices and disclosed that the third generation for PCs is under development, aiming for a 2025 launch. The company also emphasized the importance of extended reality (XR), noting Meta (NASDAQ:META)'s utilization of the Snapdragon XR platform to enhance on-device AI capabilities.
The firm's QCT Auto & IoT segment is anticipated to exhibit a compound annual growth rate (CAGR) of over 22% through fiscal year 2029, with automotive revenues expected to hit around $8 billion and IoT revenues projected to reach approximately $14 billion by the same year. The company's revenue mix goal is to achieve a 50/50 split between handset and Auto & IoT by 2030.
Despite the positive developments, the analyst noted that the loss of Apple (NASDAQ:AAPL) as a customer is likely to impact Qualcomm until 2027. Nevertheless, the analyst expressed confidence in CEO Cristiano Amon's leadership and Qualcomm's transition from being predominantly a modem and cellular IP firm to a more diversified semiconductor player.
The revised price target of $210 is based on approximately 23 times the estimated enterprise value to net operating profit after tax (EV/NOPAT) for the calendar year 2025.
In other recent news, Qualcomm Incorporated has reported strong fourth-quarter and fiscal year 2024 results, with non-GAAP revenues of $10.2 billion and earnings per share (EPS) of $2.69. The chipset segment contributed $8.7 billion in revenues, while the licensing segment brought in $1.5 billion. Record revenues of $899 million were reported in the automotive market.
Qualcomm has announced a strategy to target a total addressable market of approximately $900 billion by 2030, with plans for significant growth in the automotive, IoT, PC, industrial, and XR sectors. Cantor Fitzgerald and UBS have maintained a Neutral rating on Qualcomm, citing a strategic shift and challenges in the mobile market respectively.
Loop Capital initiated coverage on Qualcomm, assigning a Hold rating, and emphasized the need for revenue diversification. These are recent developments from Qualcomm.
InvestingPro Insights
Qualcomm's strategic outlook, as presented at its Investor Day, aligns well with several key metrics and insights from InvestingPro. The company's P/E ratio of 18.11 and adjusted P/E ratio of 17.99 for the last twelve months suggest that the stock is trading at a relatively modest valuation, especially considering its growth prospects. This is further supported by an InvestingPro Tip indicating that Qualcomm is "Trading at a low P/E ratio relative to near-term earnings growth."
The company's focus on diversification and growth in edge AI, PC platforms, and automotive segments is reflected in its solid financial performance. Qualcomm reported a revenue of $38.96 billion in the last twelve months, with a notable revenue growth of 18.69% in the most recent quarter. This growth trajectory supports the company's ambitious TAM projections and strategic initiatives.
Qualcomm's dividend policy also stands out, with an InvestingPro Tip highlighting that the company "Has raised its dividend for 22 consecutive years." This demonstrates Qualcomm's commitment to shareholder returns, even as it invests in future growth areas. The current dividend yield of 2.06% adds to the stock's appeal for income-focused investors.
For those interested in a deeper analysis, InvestingPro offers 11 additional tips on Qualcomm, providing a comprehensive view of the company's financial health and market position.
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