QCOM

Qualcomm stock prices are highly dependent on the success of Apple’s development of its 5G modems for the Iphone division. This division was recently acquired by Apple from Intel in order to dump chip supplies from Qualcomm that has the monopoly of this type of chip manufacturing. The U.S. Supreme Court gas finally declined Apples bid to continue fighting over two related Qualcomm patents. Qualcomm has estimated that a positive effect will come from an additional $2 of EPS from this trial as the company would receive royalties from Apple even if its smartphones and computers would be equipped only with their own chips. Thus, the decision of Apple to replace Qualcomm CPU chips in Macbooks with their own came as a surprise because Apple would have to pay royalties anyway.

The leading role of Qualcomm in 5G chip manufacturing secures stable cash flows, while Apple is rumored to be failing to create an appropriate replacement for third-party chips, leaving Qualcomm an exclusive chip maker for new Iphone models. Apple forecasted that it would acquire 20% of third-party 5G chips, but now it seems this figure would be close to 100%.

Qualcomm is also benefiting from electric vehicles and self-driving vehicles, as producers secured $16 billion from digital devices that are planned to be produced. According to the company’s management it will boost this business revenue to $3.5 billion a year in the 2024-2026 period. QCOM shares are traded 30% off its peak values with P/E ratio at 9. This ratio is seen to be underestimated as Qualcomm is likely to lower its dependence from Apple as its major client is considering significant progress in many other company divisions, including IoT.

The mid-term target price for QCOM shares is at $150.