Founded in 1985, Qualcomm has grown from a small research and development center into a global leader in smartphone processors and wireless technology. Today, Qualcomm is one of the most dominant forces in the smartphone industry, with its Snapdragon processors powering devices from major brands like Samsung (SMSN), Xiaomi (XIACF), OnePlus, Oppo, and Vivo. The company holds a 28% market share in the global smartphone processor market, with its technology integral to the performance and connectivity of the world’s most popular smartphones.
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The company has produced strong performance throughout 2024, with revenue of $38.96 billion. However, QCOM faces ongoing legal challenges, including a notable dispute with Arm (ARM) over licensing agreements in the aftermath of its acquisition of the CPU manufacturer Nuvia. Nevertheless, Qualcomm is in good shape and is looking forward to an even stronger future, if possible. Let’s shortly examine the company’s financials for 2024 and its future plans and possible hazards:
- 2024 Financial Performance: Qualcomm’s financial performance in 2024 was impressive, reflecting its strong position in the global market. The company reported revenue of $38.96 billion, with a gross profit of $21.90 billion and a net income of $10.14 billion. These figures highlight Qualcomm’s ability to generate growing revenue and maintain profitability, mainly attributed to demand for its processors and wireless technology in the mobile industry. QCOM’s strong financials provide a solid foundation for future growth.
- Future Plans: This is not surprising, but Qualcomm has ambitious plans to expand its business. By 2030, the company aims to address a total addressable market (TAM) of approximately $900 billion. Key growth areas include transportation and IoT, with combined revenues expected to reach $22 billion by 2029. Qualcomm also targets $4 billion in revenues from the PC market and another $4 billion from industrial applications. The acquisition of Nuvia, a startup specializing in custom CPU cores, is expected to enhance Qualcomm’s computing and AI capabilities. To put it simply, the company is preparing for the rising demand for advanced AI solutions.
- Potential Risks and Competitors: Despite its strong market position, Qualcomm faces several hazards and pressure from competitors. Key threats like MediaTek, Intel (INTC), which it indulged for a moment to acquire, and Apple (AAPL) continue to innovate and capture market share. Additionally, the ongoing legal battle with Arm (which is preparing for a retrial) poses a potential threat to Qualcomm’s licensing agreements and could impact its financial performance. Other external factors, such as regulatory changes, supply chain disruptions, and geopolitical tensions, also present challenges. Qualcomm focuses on expanding its product portfolio, especially targeting the automotive industry to ease these risks.
Is Qualcomm a Buy or a Hold?
On Wall Street, Qualcomm is a Moderate Buy. The average price target for QCOM stock is $199.88, implying a 30.11% upside potential.
Takeaway
Qualcomm’s journey in the AI era is marked by its strong market position and potential challenges in the near term. One of the company’s strategies to address potential risks in a growing AI industry filled with competitors was the acquisition of Nuvia. As one of the leading suppliers of smartphone processors, the company is well-positioned to pave a clear way for itself in the evolving technological landscape and maintain its leadership in the industry.
