Integrated chip manufacturing giant, Qualcomm (NASDAQ: QCOM) announced its plans to launch a venture fund, which will invest around $100 million in companies that are creating new technologies for the metaverse, according to a Wall Street Journal report.
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The fund aims to diversify QCOM’s business and broaden the market for its products.
Details of the Venture Fund
Qualcomm stated that the venture fund investments will support businesses and developers via equity investments and grants. Likewise, the company will start taking applications from eligible companies in June.
Notably, this is not the first time the company has made such investments. Earlier, QCOM had made significant venture investments in new technology segments like 5G and artificial intelligence (AI).
QCOM utilizes its balance sheet to make these investments, and over the last 20 years QCOM has created $2 billion in assets under management in its portfolio.
According to financial data provider PitchBook Data Inc., 2021 has been a record year of fundraising venture capital deals, with total U.S. venture-capital deals surging 88% year-over-year to $144.7 billion.
Management Weighs In
Chief Financial Officer, Akash Palkhiwala, commented, “The primary purpose is to create this ecosystem around our technology portfolio.”
He further stated that the company may consider acquisition opportunities from the portfolio, albeit M&A is not the key motivation behind the fund.
Wall Street’s Take
On March 18, Piper Sandler analyst Harsh Kumar reiterated a Buy rating on QCOM with the price target of $225 (44.61% upside potential).
Kumar believes that the shares are ‘mis-valued’ at current levels based on his belief that Qualcomm is “set to capitalize on an already proliferating” Internet of Things (IoT) opportunity.
Pounding the table, he asserts that Qualcomm is one of the few companies that can address sophisticated compute and connectivity opportunities for low, mid, and high-volume units.
The rest of the Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 12 Buys and 5 Holds. The average Qualcomm price target of $219.06 implies 40.79% upside potential to current levels.
Investors Weigh In
TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Qualcomm, with 4.7% of investors increasing their exposure to QCOM stock over the past 30 days.
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