Should I Buy Qualcomm (QCOM)? Finance YouTuber Analysis

The analyst sees Qualcomm, a semiconductor design company, as having a significant opportunity to 5x its market cap to $1 trillion in 5 years. Key catalysts include its entry into the data center market for AI, with new products and major customers like Meta, and expansion beyond smartphones into the automotive and PC industries, particularly benefiting from the proliferation of assisted driver technology.

“I can still see the stock price jumping by 5x from $188 up closer to $1,000 per share. It has a market cap of $199 billion. I can see this company having a market cap of 1 trillion 5 years from now.”

The analyst recommends Qualcomm, praising its successful expansion beyond smartphones into the automotive and computer industries, and more recently, into the data center market with a deal with Meta Platforms. Given its track record, investors can be confident in its ability to succeed in the supply-constrained data center market, making it an undervalued stock.

“Qualcomm is selling at $184 per share, and I calculated a fair value of $284.”

The analyst suggests Qualcomm as an undervalued stock, trading at $216 per share, below his intrinsic value calculation of $274. He highlights Qualcomm's expansion into the data center market, receiving early orders, and its successful diversification into the automotive and personal computing industries. This positions Qualcomm to benefit from the significant growth in data center spending by hyperscalers.

“Qualcomm trading at $216 per shares. It's below my intrinsic value calculation at 274.”

The YouTuber suggests Qualcomm is well-positioned for the shift to 'edge AI,' where intelligence moves directly onto devices like phones and cars. Its Snapdragon chips, combining CPUs, GPUs, and MPUs, can run AI models locally, reducing costs and latency, and unlocking new applications.

“Qualcomm, ticker QCOM, serves the consumer market here, spending years preparing for the shift from the cloud into the device itself. Its Snapdragon chips combine CPUs, GPUs, and dedicated MPUs that can run AI language models directly on those cars, phones, and laptops, and then the IoT devices.”

The speaker views Qualcomm as a favorable addition to SCHD, noting that it has been 'left behind' by other tech and chip companies. They suggest its inclusion could 'give some life' to the SCHD portfolio, implying an expectation of future growth or recovery.

“Another one's going to be Qualcomm. So Qualcomm was added. Cisco systems is the one that was it's pretty much replacing from the technology sector. Qualcomm's been left behind by uh many of the the tech and and chip companies per se. So maybe it can give us some life in that uh in that CHD portfolio.”

The analyst expresses a lack of excitement for Qualcomm, despite its potential in edge NPUs, due to its low 1-2% expected revenue growth. While acknowledging its future role in edge AI, the current growth figures make it less appealing compared to other high-growth chip companies.

“really why I'm kind of avoiding shares of Intel and not really excited about Qualcomm even though they could have the advantage in those edge NPUs, in the edge uh AI chips.”

The YouTuber includes Qualcomm in a list of tech stocks with significant overseas revenue that are expected to benefit from a weakening dollar. Stronger foreign currencies will translate into higher dollar-denominated revenue, providing a potential tailwind for the company's financial results.

“You've got a lot of tech stocks here on the list with Qualcomm skyworks and lamb research as well.”

The analyst suggests buying Qualcomm, highlighting its 21st year of dividend increases and strong growth in its automotive and IoT segments. The company recently secured a multi-year agreement with Apple, reducing uncertainty. Valuation is attractive, trading at 12 times earnings, a 40% discount to its five-year average, suggesting significant upside.

“Qualcomm ticker QC with its slightly higher 2.9% dividend yield though the company has been slower to grow its dividend at just 5% annual Pace over the last 5 years but now you would expect a little slower dividend growth from a tech company because it's investing in that growth and and it's come through in overall returns Over The Last 5 Years investors have returned an average 19% a year including the dividend.”

Qualcomm is presented as a tech stock with a strong 7.5% earnings yield, despite current revenue and earnings expectations being lower due to its ties to Apple's product cycle. The analyst highlights Qualcomm's expansion into automotive and IoT semiconductors, its growing licensing business, and its leadership in smartphone processors as reasons to buy and wait for a rebound next year, while collecting a 2.8% dividend.

“Still though the company leads with a richly valued Tech sector with an earnings yield of 7.5 percent and you get a 2.8 dividend just for for waiting on that rebound next year”

The YouTuber suggests buying Qualcomm because it recently secured multi-generation supply agreements with Meta Platforms and Microsoft Azure for its new Dragonfly C1000 CPU, targeting the AI data center market. Despite nearly doubling its revenue target outside of smartphones, the stock is down 15%, implying the market is undervaluing its data center business.

“To me, that means the market is essentially pricing Qualcomm's entire data center business at zero, which actually does make some sense.”

The YouTuber recommends buying Qualcomm, citing its PEG ratio of 0.57, which he considers a 'bargain bin price' indicating it's trading below its growth rate. He emphasizes that these are high-quality companies with real revenue and earnings, not speculative stocks.

“AMD and Qualcomm are both sitting at a peg of 0.57. Dell's at 0.61, Micron at 0.64, and Broadcom at 0.75. And the best part is these are not speculative penny stocks.”

The YouTuber views Qualcomm as fairly valued with a score of 75/100. While acknowledging its dominance in smartphone chips, he points to growth drivers in its automotive business and its positioning for on-device AI with the Snapdragon 8 Elite Gen 5.

“Analysts list Qualcomm with 8.7% upside over the next 12 months. And in my scoring system, I see it as fairly valued today with an overall score of 75 out of 100.”

The YouTuber recommends Qualcomm due to its strong position in the smartphone and IoT chip markets, expanding into automotive chipsets. It has a low PE ratio of 16, a solid dividend, and its stock price is currently 10% below its 200-day moving average, indicating undervaluation. Analysts project a 29% upside.

“The 200 day simple moving average is at $171. While the filming of this today, the stock price is at $155. It's about 10% below that 200 day moving average, meaning that it has a little bit of value to make up, which I obviously like to see.”

The YouTuber views Qualcomm as a 'cash cow' due to its Snapdragon X+ processor meeting Microsoft's AI Co-pilot PC requirements, positioning it to compete with Apple's M3 chip in high-end laptops. Qualcomm designs chips using Arm infrastructure, making it integral to the expanding AI ecosystem. Strong historical financial performance, with a 5-year CAGR of 24.4%, supports the bullish outlook.

“I see Qualcomm to be a cash cow I don't see them blowing up as quickly as Nvidia anytime soon but they design most of the edge chips that are in all of our Mobile Electronics and now that laptops are offered with some high-end Snapdragon processors they may be growing a lot faster than expected”

The YouTuber recommends Qualcomm, a leader in semiconductor design and telecommunications, highlighting its Snapdragon processors in mobile devices and 5G modem chips in Apple phones. He notes its strong performance with over 94% growth in the last year and over 20% total returns over three and five years, combined with a healthy dividend of 1.43%.

“now let's take a look at their performance over the last year which is over 94% and the three and fiveyear total returns are both over 20% Which is extremely high and this all comes with a very healthy dividend return of 1.43% you're getting a great return and it also has a very healthy dividend which is really the best of both worlds”

The YouTuber sees Qualcomm as a key player in the middle phase of AI growth, focusing on edge computing. Qualcomm's Snapdragon processors are leaders in mobile devices, and they produce 5G modem chips. As AI shifts from mainframes to individual user devices, requiring significant hardware upgrades, Qualcomm's low-power chips for IoT and automotive systems will become increasingly important, driving revenue growth in the coming years.

“the chips from qualcom are associated more with Edge Computing where they are a leader with their Snapdragon processors that are in Android phones tablets and mobile devices”

The YouTuber is positive on Qualcomm, emphasizing its leadership in mobile technology and semiconductor innovation, particularly its role in advancing 5G and Edge AI. He points to Qualcomm's chipsets designed for low power and high performance as crucial for Edge AI applications, and its use of AI for chipset design optimization and wireless communications.

“Qualcomm looks to gain from AI really in four key areas and those happen to be Edge AI... 5G connectivity... AI for chipset design optimization... and optimize Wireless Communications”

The YouTuber suggests putting Qualcomm on the radar for trading, specifically advising against buying shares and instead looking for short-term trade ideas. He emphasizes taking what the market gives rather than guessing or front-running.

“I don't want you guys trying to buy shares of this I want you to be looking for trade ideas okay take what the market give you don't guess don't gamble Don't Front run take what the market give you put this one on your radar for me guys”

The YouTuber identifies Qualcomm as an AI stock to consider. He recommends buying it on a 'red day' or after a 5-10% price drop from its current level, advocating for a disciplined entry strategy to maximize potential returns.

“always wait for the red day wait for a red day if you need a specific percent amount wait for being down 5% from the price you see it at you can do that red day 5% down or 10% down is just a good rule of thumb in terms of where you want to get in”