2. QUALCOMM Incorporated (NASDAQ:QCOM)
Forward PE as of June 24: 20
Number of Hedge Fund Holders: 78
QUALCOMM Incorporated (NASDAQ:QCOM) is an American telecom equipment and semiconductor company headquartered in California. The company operates in a variety of high-growth markets including smartphones and autonomous vehicles and makes chips for companies like Samsung, Huawei, BMW, and Toyota. In the first quarter, 78 hedge funds held positions in the company and their stakes amounted to $4.6 billion. As of March 31, Matrix Capital Management is the most significant shareholder in the company and has a position worth $1.17 billion.
QUALCOMM Incorporated’s (NASDAQ:QCOM) handset business is thriving, especially with the strong performance of the company’s third-generation Snapdragon platforms built for high-end smartphones. Revenues from Chinese OEMs grew by over 40% in the first half of fiscal 2024, showing a strong demand beyond its major customers like Samsung and Huawei.
QUALCOMM Incorporated’s (NASDAQ:QCOM) diversification strategy is bearing fruit, particularly in the automotive and IoT segments. The company’s automotive business has experienced a significant 35% year-over-year revenue increase, which is mainly credited to its Snapdragon Digital Chassis, its suite of technologies that supports advanced driver-assistance systems, autonomous driving, and enhanced in-car experience. The company’s design-win pipeline in the automotive sector has expanded significantly and is now valued at approximately $45 billion which shows strong market confidence and a steady flow of future business. The company is also expanding its presence in the IoT market and is introducing innovative products tailored for applications in robots, drones, and industrial handheld devices.
QCOM is trading at 20 times its 2024 earnings estimate, which is a 14% discount to its sector median. On June 21, Tigress Financial’s analyst, Ivan Feinseth raised his price target on the company stock to $270 from $238 and kept a Buy rating. Feinseth expects the company to benefit from increased AI capabilities and processing power in handheld devices. Overall, analysts hold a consensus Buy opinion on QUALCOMM Incorporated.
ClearBridge Investments stated the following regarding QUALCOMM Incorporated (NASDAQ:QCOM) in its first quarter 2024 investor letter:
“Another theme of that era was mobile telephony. QUALCOMM Incorporated (NASDAQ:QCOM) soared over 2,600% in 1999 on a very similar premise as Nvidia is seeing now — it was the brains behind the secular trend, so whoever won, Qualcomm would participate. The theme was spot on, the company was perfectly positioned, and it went on to perform massively well. From 1999 to 2023, Qualcomm’s sales rose more than 9x and EBITDA 12x, very impressive long-term growth rates. Investors who held the stock during that period, however, received a total return of only 154%, underperforming the 410% return of the S&P 500 Index.”
