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Qualcomm Inc - Stock Quote QCOM

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Morningstar's Qualcomm Inc Stock Analysis

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Qualcomm Overcomes Chip Shortage To Deliver Record Q2 Results; $163 FVE, Shares Undervalued

Abhinav Davuluri, CFA Sector Strategist

Analyst Note

| Abhinav Davuluri, CFA |

Qualcomm reported fiscal second-quarter revenue above management’s guidance, with the firm benefiting from the ongoing ramp of 5G smartphones and broad-based chip demand. Despite the ongoing chip shortage, the firm has secured sufficient supply to achieve significant growth via multi-sourcing initiatives, including the use of foundry partners such as TSMC and Samsung, as well as second-tier foundries such as UMC and GlobalFoundries for products made on mature process nodes. Chipset, or QCT, sales were boosted by share gains at Android smartphone original equipment manufacturers, or OEMs, and greater 5G chip content. Notably, Qualcomm has increased its premium tier processor share for Samsung’s Galaxy S22 smartphones to 75%, up from 40% in the Galaxy S21. Despite headwinds in the Chinese smartphone market, management remained confident in growth for the rest of the year, which we attribute to increased 5G penetration. We are maintaining our $163 fair value estimate and see shares of narrow-moat Qualcomm as undervalued at current levels.

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Qualcomm Inc's Company Profile

Business Description

Qualcomm develops and licenses wireless technology and designs chips for smartphones. The company's key patents revolve around CDMA and OFDMA technologies, which are standards in wireless communications that are the backbone of all 3G and 4G networks. The firm is a leader in 5G network technology as well. Qualcomm's IP is licensed by virtually all wireless device makers. The firm is also the world's largest wireless chip vendor, supplying nearly every premier handset maker with leading-edge processors. Qualcomm also sells RF-front end modules into smartphones and chips into automotive and Internet of Things markets.

5775 Morehouse Drive
San Diego, CA, 92121-1714
T +1 858 587-1121
Sector Technology
Industry Semiconductors
Most Recent Earnings Mar 31, 2022
Fiscal Year End Sep 27, 2021
Stock Type Cyclical
Employees 45,000

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