The recent pullback in the tech sector has affected most semiconductor producers, with Qualcomm (NASDAQ: QCOM) stock one of the worst hit among them. QCOM fell below the crucial $200 psychological threshold during the pullback of 2.92% in the previous month. In the past five days, these losses extended to 7.15% as investors intensified sell-offs.
However, the latest trading session shows signs of recovery after a positive gain of 4.70%, which set the QCOM stock price at $194.97. Pre-market gains of 1.05% at the time of publication further aided the recovery.
Baird analysts see numerous potential catalysts for QCOM stock surge
Baird believes QCOM is a “bullish fresh pick” at this valuation and sees a potential 30% upside from the current price levels.
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On July 23, Baird upgraded Qualcomm’s stock price target from $200 to $250, citing positive initial channel feedback and assigning an “outperform” rating.
The procurement estimate for the iPhone 16 has increased to over 90 million units, up from the previous estimate of around 80 million. Artificial intelligence (AI) is highlighted as a key driver, similar to its role in the Galaxy S24.
Analysts predict increased demand for Qualcomm’s handsets in Q3 following seasonal downturns. AI, starting with the iPhone 16, will contribute to double-digit increases in average selling prices (ASPs).
Additionally, Qualcomm is expected to benefit from initial AI integration in high-end Chinese phones and the next-gen Galaxy platform in the first half of 2025. Due to AI, higher performance, and faster uplinks, the ASP and content for RF components are also projected to rise.
Qualcomm is gaining RF market share at Apple (NASDAQ: AAPL) and increasing shipments to Chinese OEMs. The Snapdragon X Elite processor has received a robust initial response in South Korea, with demand exceeding expectations.
Companies like Samsung (KRX: 005930), HP (NYSE: HPQ), Dell (NYSE: DELL), Acer (TPE: 2353), Microsoft (NASDAQ: MSFT), and Lenovo (HKG: 0992) are currently shipping the X Elite. Baird analysts see the recent pullback as a great opportunity to buy QCOM shares.
There are even more bullish cases for QCOM stock on Wall Street
Despite a high average price target for QCOM stock, Baird is not the most bullish institution on Wall Street regarding the chipmaker.
This title goes to Tigress Financial Partners analyst Ivan Feinseth, who, on June 21, maintained a “buy” rating on Qualcomm and raised the 12-month target price to $270.
The adjustment reflects Qualcomm’s growing advantages from its AI capabilities, processing power for mobile devices, and leading position in communication technologies.
Qualcomm’s business is fast-expanding
The company’s business is accelerating, driven by revenue from Snapdragon-powered mobile devices, record automotive sales, and expanding opportunities for on-device AI integration.
Chipmaker’s strong balance sheet and cash reserves support continued innovation and shareholder returns, including a 6.25% dividend increase to $0.85 per share and $1.6 billion in shareholder returns last quarter, including $731 million in stock repurchases.
Given these factors, the analyst forecasts a potential return exceeding 35% from current levels.
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