Qualcomm’s (NASDAQ: QCOM) stock is expected to have a strong finish in 2024, driven by key innovations and strategic initiatives.
At the forefront of this growth is the highly anticipated Snapdragon 8 Gen 4 (SD8G4), Qualcomm’s most profitable mobile chipset to date, which is forecast to significantly boost Q4 earnings.
According to TF International Securities analyst Ming-Chi Kuo, SD8G4 shipments are expected to grow by 50% year-over-year, accompanied by a 15% rise in the average selling price. This puts Qualcomm in a strong position to capitalize on the recovering high-end smartphone market.
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“Compared to SD8G3, SD8G4’s 2H24 shipments are expected to grow 50% YoY to about 9 million units, with an ASP increase of around 15% to $180. It’s expected to contribute significantly to 4Q24 revenue and profit”-Ming-Chi Kuo
This momentum, combined with Qualcomm’s expanding ventures into AI and automotive solutions, has left investors bullish on its stock performance for the rest of the year.
The Chinese smartphone market is another significant driver for Qualcomm. During the recent Golden Week holiday, Chinese brands captured 80% of the market, with domestic shipments rising by 20% year-over-year, marking a sharp contrast to Apple’s flat iPhone sales.
This shift is expected to continue through Q4, supporting Qualcomm’s increasing sales of premium Android chips.
Valuation metrics and performance
Qualcomm’s stock has surged by 60.2% over the last 52 weeks, reflecting its ability to navigate market challenges while maintaining steady growth. Currently trading at $176 per share, Qualcomm has a market capitalization of $196.36 billion and an enterprise value of $199.86 billion.
The stock’s forward price-to-earnings (P/E) ratio of 16.28 is considered reasonable given its growth potential, especially compared to its trailing P/E ratio of 22.83. Qualcomm’s earnings per share (EPS) over the last 12 months stand at $7.72, bolstered by a gross profit of $37.36 billion.
These strong financials show Qualcomm’s robust position in the semiconductor industry, further supported by its balanced valuation metrics, including a PEG ratio of 1.60, a forward price-to-sales (P/S) ratio of 4.73, and a price-to-book (P/B) ratio of 8.05.
With institutional investors holding 78.32% of the company, Qualcomm’s long-term outlook remains favorable as it continues to innovate and expand into high-growth sectors.
Key factors driving Qualcomm’s stock price
Qualcomm’s diversification beyond mobile technology is critical to its future growth. The automotive division reported an 87% year-over-year revenue increase in Q3 2024, showing the rising demand for semiconductors in electric and autonomous vehicles.
Deloitte projects that semiconductor content in vehicles could exceed 45% of a vehicle’s total cost by the end of the decade, compared to 20% in 2000. Qualcomm’s automotive revenue is on track to exceed $4 billion by FY 2026, positioning the company as a leader in the automotive semiconductor market.
Additionally, Qualcomm’s partnership with Honeywell to develop AI-driven smart energy solutions showcases the company’s ability to leverage cutting-edge technologies in new markets.
This partnership highlights Qualcomm’s efforts to enhance its competitive edge and diversify its revenue streams, moving beyond its core mobile chipset business.
ChatGPT prediction for Qualcomm stock price
To gauge Qualcomm’s future potential, Finbold consulted OpenAI’s ChatGPT-4o, which predicted that Qualcomm could see its stock price reach $200 by the end of 2024.
This represents a 14% increase from its current level, driven by its expanding role in the mobile chipset market, increasing demand for automotive solutions, and continued growth in the Chinese smartphone sector.
This aligns with previous predictions made by different AI models, which forecast that QCOM shares could reach a potential price range of $200 to $250 by the end of 2024.
The AI forecast also aligns with analyst consensus, which sets Qualcomm’s average price target at $203.04, reflecting a 15.19% upside from current levels.
In conclusion, Qualcomm is well-positioned to capitalize on the growth of its core markets while exploring new avenues in AI and automotive sectors.
With the Snapdragon 8 Gen 4 launch set to drive Q4 performance, alongside its growing automotive and AI ventures, it could well hit the AI-predicted price target of $189 by the end of 2024.
Investors are watching closely as Qualcomm continues to execute its strategic initiatives, with key earnings reports in the coming weeks expected to confirm this bullish outlook.
