Qualcomm (QCOM) stock forecast: Where next for semiconductor giant?
Qualcomm (QCOM) is a $210bn semiconductor and telecommunications company that has experienced stock and earnings growth through 2021.
As the fabless manufacturer shows signs of successfully evading severe issues in the midst of global semiconductor shortages, Qualcomm continues an expansionary phase of diversification and acquisition.
But the fortunes of its customers and wider market impacts may continue to pressure shares and shape the Qualcomm stock price forecast in 2022.
Qualcomm stock analysis: Technical view
Qualcomm sits nearer to the bottom of a strongly performing group of fabless companies, in a market that’s broadly outperformed the S&P 500 this year.
While failing to reach the 80.88% 12-month performance of Nvidia (NVIDIA), Qualcomm stock has still enjoyed strong growth of 20.09% in the past year.
That may suggest a higher ceiling than its outperforming industry competitors and comparators, particularly when comparing the stock’s 22.36% growth in the last three months with the 17.06% contraction by NVIDIA over the same period.
The stock experienced growth through November 2021 following strong earnings results, which boosted the price by 33.94% over the month. The price was tempered by moderate 4.12% growth over December 2021 and a 3.89% contraction in January 2022.
The Qualcomm share value is up 4.45% year-to-date, with recent gains masking broad losses through January as the tech bubble lost some air. The stock is up by 15.20% over the last five days, with positive earnings results adding hope that a new resistance level will be breached.
Qualcomm’s share price closed at $188.20 on 2 February 2022 in advance of earnings releases, representing a 6.25% increase on the day and leaving the stock with a market cap of $211.7bn, as after-hours trading began to knock some value off.
A technical analysis of Qualcomm stock at the time of writing (3 February) indicated a buying surge could return following promising earnings results. One-day oscillators are giving ‘buy’ signals, but with a neutral relative strength index (RSI) of 59.12. One-month oscillators are also placed in a ‘buy’, with the RSI at 70.61 moving towards overbought territory.
Moving averages were in a strong ‘buy’ territory at the time of writing (4 February), with the exponential moving average sitting at 174.88m and a simple moving average of 170.31. All but one of the moving average indicators indicated ‘buy’.
R1 resistance levels of $193.77 could be achievable after the stock’s latest headwinds, and may help it accelerate past the 52-week peak. Although investors will be wary of recent downturns that left the share closer to its pivot point of $175.57.
Escaping semiconductor shortages
For Qualcomm, 2021 might be remembered as a transformative year.
That is most evident when looking at the global semiconductor shortage which has gripped the telecommunications and automotive industries over the last year, and could continue into 2023.
In November 2021, Qualcomm shares rose after the company reported 43% growth in annual revenue and 74% growth in net income for the fiscal year ended 26 September, which demonstrated that shortages that affected the company earlier this year have passed.
Any shortage in distribution appears to have been cushioned by the increased price of semiconductors. Fabless chip manufacturers have generally enjoyed a strong year since the onset of shortages, as supply side pressures pushed up unit prices.
As a result, the price of semiconductor and electronic components rose in the US for the first time in nearly 20 years, increasing by 8.2%, according to Ibis.
Diversification to 5G and acquisitions
In the latest Qualcomm stock news, the company based in San Diego, California, is growing. In April, the manufacturer announced a deal with Vodafone (VOD) to develop a technical blueprint in the 5G sector.
According to Gartner, 5G network infrastructure revenue will grow by 39% this year, with 60% of communications service providers (CSPs) commercialising 5G services in Tier 1 cities by 2025, up from 10% in 2020.
The company is using its clout to enter additional sectors to capitalise on technological developments. It has succeeded in breaking into the electric vehicle (EV) market with a recent announcement that BMW would begin using its chips in the next generation of driver-assistance and self-driving cars.
Another part of that strategy has been acquisitions, which have allowed the company to diversify into the internet of things (IoT), mobile, data centre and healthcare.
Most recently, Qualcomm spent $4.5bn on Veoneer, a supplier of automotive technology, and $1.4bn on NUVIA, a central processing unit (CPU) developer.
Qualcomm’s latest results boost the stock
Qualcomm’s underlying performance suggests there may be good reasons to believe its share price will continue to grow. The company’s Q1 2022 earnings reinforced strong full-year results. Published in November 2021, the numbers demonstrated strong resistance to global supply chain issues.
First-quarter revenues were $10.7bn, up 30% from a year ago and at the upper bound of the company’s guidance provided in previous earnings, with net income and diluted earnings per share (EPS) up 38% and 41%, respectively. EPS at $2.98, up from $2.12 a year ago and comfortably beating the analysts’ consensus of $2.77, continuing a streak of beating targets since 2014.
Qualcomm experienced aggressive growth in both its stalwart and burgeoning industries through the year. The growing handsets division accounted for 67% of total QCT revenue, suggesting that it could remain a primary source of income going forward.
Following strong 2021 growth of 76%, Radio Frequency (RF) front-end division subsided to 7% growth against Q1 2021, while recent moves for the aforementioned deal with BMW and increasing 5G capabilities and industrial applications began contributing to top-line growth, with Automotive and IoT expanding by 21% and 41%, respectively.
The company projects revenues between $10.2bn–$11.0bn in the second quarter of 2022, an increase of up to 38.6% on the same period in 2021. Diluted EPS guidance of $2.39-$2.59 would be up to 69% higher than in Q2 2021.
Could vertical integration be a worry?
A concern for Qualcomm investors in recent years has been the increasing of its customers for vertical integration, particularly following a year of supply chain disruption and the status of Taiwan, where the semiconductor industry accounts for more than half of the global chip market.
Apple is reportedly planning to develop its own modem for iPhones, a suggestion that has been gaining momentum since the company’s acquisition of Intel’s smartphone modem business in 2019. An Apple cellular modem could affect Qualcomm, which is estimated to generate about 20% of revenue from sales to Apple.
Qualcomm addressed concerns about Apple at its 16 November investors’ day. The company said that by 2023 it would supply just 20% of all its chips for Apple iPhones, down from the current 100%, and pushing Apple revenue as a percent of Qualcomm’s total revenue into low single digits by 2024.
Management will instead increase investment in Android, which Qualcomm said comprises 85% of global phone sales, suggesting the company is likely to keep a strong hold on its biggest revenue stream.
Qualcomm (QCOM) stock forecast for 2022
Qualcomm share price predictions have shown moderate optimism in recent months.
At the time of writing (3 February), the consensus Qualcomm stock price target stood at $188.55 for the next 12 months, based on 21 analysts’ views aggregated by MarketBeat, representing a downside from the current share price (as of 3 February). Qualcomm stock forecasts ranged from the high of $240 and the low of $137.
The consensus recommendation for the stock was a ‘buy’, with 11 ‘buy’ recommendations, one ‘strong buy’ and nine ‘hold’ ratings.
The upbeat earnings report has sparked a wave of analyst activity, with four companies boosting their price targets following the report. These included JP Morgan Chase, which now expects the stock price to reach $240 in the next 12 months.
Note that analysts’ predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.
Analysts don’t usually give long-term forecasts, but algorithm-based forecasting service PandaForecast offered a Qualcomm stock forecast for 2021-2025.
The service predicted the price to reach $213.81 by December 2025, a strong upward trend from a December 2022 plateau of $134.57.
While there are few Qualcomm stock projections beyond 2025, AI Pickup is one algorithm-based forecaster providing a Qualcomm stock forecast 2025-2030. It projected the stock to fall to $139.58 by 2030, a 20.58% downside.
Note that algorithm-based predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.
FAQ
Is Qualcomm stock a buy?
Qualcomm stock was skewed towards a ‘buy’ consensus among a range of analysts compiled by Marketbeat at the time of writing (3 February), with 11 ‘buy’ recommendations, one ‘strong buy’ and nine ‘hold’ ratings.
Note that analysts’ predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.
Will Qualcomm stock go up?
Qualcomm stock is projected to rise by a number of analysts. Over the long run, Qualcomm is diversifying its revenue streams, which could help its long-term price.
At the time of writing (3 February), the consensus Qualcomm stock price target stood at $188.55 for the next 12-months, based on 21 analysts’ views aggregated by MarketBeat, representing a possible downside from the current share price (as of 3 February). Qualcomm stock forecasts ranged from the high of $240 and the low of $137.
Note that analyst predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.
Why has Qualcomm stock been going up?
Qualcomm stock increased through 2021 along with other fabless manufacturers as demand for semiconductor chips outstripped supply. The company has been able to evade more significant shortages in the second half of 2021, with strong earnings expected to accelerate the share price through February.
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