Qualcomm Diversifies Beyond Phones, Sees Growth in AI and Auto amid Strong Earnings
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Qualcomm is expanding beyond its core wireless business into high-growth areas like AI, IoT, automotive, and XR/metaverse. This diversification aims to boost growth as the mobile market matures.
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The company reported strong Q1 FY2024 earnings results, with handset and auto revenue rebounding. Analysts also forecast smartphone growth returning in 2024.
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Qualcomm has leading technology and partnerships (like with Meta) to power on-device AI inferencing needed for pervasive AI applications. Its AI chops attracted renewed investor interest.
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The stock trades at a reasonable valuation given its growth potential. EPS is expected to grow at 16%+ over the next 5 years. Upside appears higher than risks at current prices.
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Risks include high customer concentration, competition eroding wireless market share, friction with some customers like Apple, and potential legal/regulatory issues. But new growth markets help mitigate these.