Qualcomm Has Upside From Opportunities In Mobile, Non-Handsets, Analysts Say

KeyBanc analyst John Vinh hosted an investor call with the management of Qualcomm Inc QCOM.

The interaction enforced his long-term conviction in QCOM's positioning in the flagship, particularly at Samsung Electronics Co, Ltd SSNLF, and in the long-term sustainability of non-handset growth vectors in auto, IoT, AR/VR, and PC/server, he mentioned on his Wednesday note. 

Conversely, near-term smartphone trends in Android appear to remain muted, and inventories will likely correct through the end of the year, Vinh stated. 

China/Android smartphone demand trends remain muted, and OEMs will likely remain cautious on ordering patterns through the end of 2022.

Despite weak demand trends, competitive pricing trends remain rational and stable and are unlikely to risk near-term gross margin. QCOM opportunistically is reentering the ARM server market with a Nuvia-based server CPU. However, it is still prioritizing PC and smartphone-based Nuvia platforms first.

Long term, management is most optimistic about non-handset growth in PC, AR/VR, industrial IoT, and automotive ADAS, as material revenue contributions are likely from these segments. 

Vinh remains Overweight with a price target of $220. The analyst continues to see outsized upside to estimates next year driven by Apple Inc AAPL and Samsung and sees good risk/reward. 

Mizuho analyst Vijay Rakesh reiterated a Buy and $175 price target on QCOM.

After hosting QCOM's Akash Palkhiwala, CFO, and IR team, on an investor call, he believes QCOM is set up well for 2023 and beyond with Samsung, Apple Inc AAPL iPhone, and new markets with IoT-PC-Auto all ramping. 

Handsets were "Stable," with better foundry engagements/supply and Samsung tailwinds into DecQ and 2023E. He watched for mmWave in China while WiFi 6/7 drives content opportunities.

Rakesh sees an ample PC opportunity with Nuvia PC and server/AI chips. The metaverse is also a key focus at the edge, driving a much larger edge/mobile TAM.

The automotive segment, with a $19 billion and growing backlog with Arriver, is also a catalyst. 

Price Action: QCOM shares traded lower by 0.52% at $141.44 on the last check Wednesday.

Photo via Wikimedia Commons