Unfair Sell-Off: Qualcomm
QCOM stocks
dropped by 9% the day after its quarter earnings report was released. According
to the report, revenues grew by 22% year-on-year to $11.4 billion, while EPS
hit $3.13 vs $0.78 a year ago. Smartphones are still generating most of the
revenues as Apple and Samsung decided to return to Snapdragon chips and the
demand for 5G is growing. However, other business segments of Qualcomm are
expanding too, including the auto industry segment and Internet of things
(IoT).
The financial
year of 2022, that ended on September 25, made $1.4 billion ($975 million a
year before) from chips sold to automakers. The company forecasts that this
segment will expand to $4 billion by 2026. Apple is thought to use its own
solutions for a long time and is not expected to be churning out Qualcomm
products until 2024. Samsung is planning to continue using Snapdragon chips in
100% of its smartphones that allows Qualcomm to balance risks from a possible
Apple withdrawal.
QCOM shares
are trading at September 2020 levels and this is not providing a justified
valuation of its business. Qualcomm is delivering better results and has
realistic growth projections.
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