Apple’s iPhone 16 will be launched in September, and it looks like the company is preparing for a surge in demand. The tech giant is aiming to ship more than 90 million units, representing a nice uptick from the low 80 million seen in previous iPhone launches.
While that is obviously good news for Apple, it is also set to be beneficial to Qualcomm (NASDAQ:QCOM), as the company supplies Apple with 5G chips used in the iPhone.
As such, Baird’s Tristan Gerra is bullish on the implications for the chip maker with the analyst expecting “double-digit increases in Qualcomm’s ASPs (average selling prices) for various components starting this 2H, along with market share and content gains.”
As with the Samsung Galaxy S24 launch earlier this year, AI is the driver here. Beginning with the iPhone 16 in 2H24, alongside initial AI content in high-end phones for China smartphone OEMs, and the subsequent introduction of the next-generation Galaxy in the first half of next year, Gerra thinks AI will be responsible for the gains.
Boosted by “higher performance/faster uplinks, and higher integration,” RF ASP and content will also see benefits from AI. “From a unit standpoint,” Gerra goes on to explain, “Qualcomm will benefit from both RF share gains (initially reported by Skyworks) at Apple (1-1.5GHz), along with initial shipments to China smartphone OEMs for lower-end phones, displacing local suppliers of discrete RF components.”
Meanwhile, on the back of a calendar Q1 trough in YoY comps followed by a calendar Q2 seasonal trough, in C3Q, Gerra expects to see “strengthening demand trends” for Qualcomm’s handset business.
In further good news, channel checks also suggest to Gerra that initial shipments of X Elite processors for Copilot+ PCs are surpassing expectations.
Such is Gerra’s confidence, he has now made QCOM stock a “Bullish Fresh Pick,” and has also raised his price target from $200 to $250, suggesting shares will post growth of 37% over the coming months. Hardly needs mentioning but Gerra’s rating stays an Outperform (i.e., Buy). (To watch Gerra’s track record, click here)
Amongst Gerra’s colleagues, 18 others join him in the bull camp, 9 stay on the fence with Hold ratings while 1 bear keeps a Sell, all coalescing to a Moderate Buy consensus rating. The forecast calls for 12-month returns of 13.5%, considering the average target clocks in at $205.6. (See Qualcomm stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
