Qualcomm Stock Downgraded by President Capital Management

Overview
Investing.com – President Capital Management has downgraded Qualcomm Incorporated (NASDAQ: QCOM) stock due to increasing challenges, including regulatory risks and Apple’s transition to in-house modem chips.

Key Points
– Challenges Faced:
– Regulatory risks
– Apple’s shift to self-developed 4G/5G modem chips
– Slowdown in Qualcomm’s licensing (QTL) business
– Weakness in the AI PC segment

• Impact of Apple’s Move:

  • Apple's in-house modem chips are expected to reduce Qualcomm’s profits significantly.
  • Apple has historically been a major revenue source for Qualcomm.

• Diversification Efforts:

  • Qualcomm is attempting to diversify its revenue streams as it prepares for the end of its lucrative partnership with Apple.

• QTL Licensing Business:

  • The QTL licensing business is showing signs of slowing down.
  • Future gains rely heavily on the growth of the automotive and IoT sectors, despite the robust high-end smartphone market.

• Stock Performance:

  • Qualcomm’s stock has increased by about 14% this year, trading at $165 on Tuesday.
  • The company remains the largest supplier of smartphone chips, benefiting from a recovery in the smartphone market linked to AI applications.

• Fiscal Forecast:

  • Qualcomm set its fiscal first-quarter revenue target at $10.9 billion, projecting earnings per share of $2.95.
  • The quarter includes the crucial holiday shopping season in key markets such as the U.S. and Europe, hinting at optimism regarding near-term demand despite existing challenges.