Qualcomm Signals Smartphone Recovery. Where Analysts See the Chip Stock Going.

It’s a potential turning point for the stock, which has broadly flatlined this year so far amid weaker smartphone sales that have dented demand for Qualcomm’s mobile processors and 5G wireless chipsets

“Revenue and earnings per share were above consensus, driven by stabilizing Android demand, with inventory destocking largely behind [it],” wrote KeyBanc analyst John Vinh. 

Vinh kept an Overweight rating on Qualcomm stock with a $145 target price. He highlighted the expectation of continued strength in demand for Android smartphones, particularly in China, as a reason to be positive heading into the December quarter. 

Qualcomm is looking to diversify its business beyond reliance on smartphones, into areas such as automotive chips. It recently unveiled a processor for personal computers capable of running artificial-intelligence applications, taking on
Intel
(INTC) and
Advanced Micro Devices
(AMD). 

Intel shares were up 0.3% in premarket trading on Thursday while AMD was up 0.6%.

“With Handsets inventory largely cleared, the story sets up for growth in ’24 boosted by average selling price increases from new edge AI capabilities,” wrote Susquehanna Financial Group analyst Christopher Rolland.

Rolland raised his target price on Qualcomm to $140 from $130 and kept a Positive rating on the stock.

However, Qualcomm’s stormy relationship with Apple remains a topic of debate. Qualcomm signed a contract to supply Apple with 5G chips for its iPhone launches across the next three years in September but is still expected to eventually lose a large part of the business to Apple’s in-house chips. 

“We believe Apple remains motivated to part ways with Qualcomm, [creating] a lingering $10 billion overhang,” wrote Oppenheimer analyst Rick Schafer in a research note. 

Schafer kept a Perform rating on Qualcomm stock with no target price. 

Write to Adam Clark at [email protected]