10 Best Magic Formula Stocks For The Rest Of 2024

8. QUALCOMM Incorporated (NASDAQ:QCOM)

Number of Hedge Fund Investors In Q2 2024: 100

Gotham Asset Management’s Q2 2024 Stake: $43.9 million

QUALCOMM Incorporated (NASDAQ:QCOM) is the leading player when it comes to designing smartphone chips. The firm also benefits from a well thought out business model, which sees it profit from both licensing revenue and chip sales. This means that QUALCOMM Incorporated (NASDAQ:QCOM) is guaranteed revenue from its current sales in the future as well. However, the highly cyclical nature of the smartphone industry means that the firm’s fortunes are tied to the global economy. Smartphones typically sell well when the economy is robust, and QUALCOMM Incorporated (NASDAQ:QCOM) has somewhat struggled lately due to an economic slowdown in China. For instance, not only did rumors claim that the firm was shutting down research centers in China last year due to an economic slowdown, but QUALCOMM Incorporated (NASDAQ:QCOM)’s earnings call for the third quarter of fiscal 2023 also saw the firm estimate that it continued “to estimate that calendar 23 handset units will be down at least a high single-digit percentage relative to calendar ’22, reflecting the macro environment and a slower recovery in China.” Recently though QUALCOMM Incorporated (NASDAQ:QCOM) is making moves to mitigate its smartphone dependence by investing in making chips for cars and IOT gadgets.

Hedge fund Aristotle Capital Management shared its insights on QUALCOMM Incorporated (NASDAQ:QCOM)’s plans for diversification during the Q2 2024 investor letter:

“Qualcomm, a leading wireless communications technology company, was the largest contributor for the quarter. After a period of weaker global demand for smartphones (driven by a slowdown in China) and elevated channel inventory, demand from Chinese handset manufacturers accelerated 40% year‐over‐year. More importantly, in our opinion, Qualcomm continues to execute on a previously identified catalyst of shifting its business mix beyond smartphones. The company announced increased progress for its automotive and Internet of Things (IoT) solutions. Within auto, the increase in vehicle content has resulted in 35% year‐over‐year revenue growth, with a design win pipeline of ~$45 billion, keeping the company on track to achieving ~$4 billion in auto‐related revenues by 2026. In recent years, despite persistent threats of insourcing from large clients (most notably Apple), Qualcomm has been able to retain its high market share in handsets while simultaneously expanding in non‐smartphone devices. We believe this progress is a testament to Qualcomm’s history of high (and productive) R&D spending, resulting in technological superiority. We believe Qualcomm’s technologies will continue to benefit as the world stays on a path toward a proliferation of connectivity between varying devices and as AI applications extend from the cloud to on‐device.”