Shares of Qualcomm (NASDAQ:QCOM) are on the rise following an earnings report that exceeded expectations, marking a potential turnaround for a stock previously stagnant due to declining smartphone sales impacting demand for its mobile processors and 5G wireless chipsets.
On Thursday, analysts from KeyBanc and Susquehanna Financial Group expressed optimistic views about the company's future. Vinh noted that revenue and earnings per share surpassed consensus, attributing this to a stabilization in Android demand following significant inventory destocking. Consequently, he maintained an Overweight rating on Qualcomm stock and set a target price of $145.
Susquehanna analysts highlighted the cleared handset inventory and growth prospects stemming from new edge AI capabilities, as well as increases in average selling prices. As a result, they raised their target price to $140 from $130 while preserving a positive rating on the stock.
Qualcomm has been diversifying its operations beyond smartphones into fields such as automotive chips. The company recently introduced a processor for personal computers capable of running AI applications, posing a challenge to competitors Intel (NASDAQ:INTC) and AMD (NASDAQ:AMD).
Despite having a contract with Apple (NASDAQ:AAPL), Qualcomm faces uncertainty due to Apple's expected shift towards in-house chips. Addressing this concern, Oppenheimer analysts mentioned a lingering $10 billion overhang but maintained a Perform rating on Qualcomm stock.
InvestingPro Insights
According to InvestingPro data, Qualcomm has a market cap of $123.75 billion and a P/E ratio of 14.34 as of Q3 2023. The company's revenue in the last twelve months reached $38.58 billion, showing a decline of 8.44% compared to the previous period.
InvestingPro Tips suggest that Qualcomm yields a high return on invested capital and has raised its dividend for 21 consecutive years, making it an attractive option for investors seeking steady income. The company also operates with a high return on assets, indicating efficient management. Despite analysts anticipating a sales decline in the current year, Qualcomm's liquid assets exceed its short-term obligations, pointing to a solid financial position.
With over 50 additional tips available on InvestingPro, investors can gain a comprehensive understanding of Qualcomm's performance and outlook. These insights are essential for making informed decisions and optimizing investment strategies.
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