BofA’s List Of AI & Semiconductor Stocks That Fund Managers Love & Hate: 16 Stocks On The Manager Radar

3. QUALCOMM Incorporated (NASDAQ:QCOM)

Number of Hedge Fund Holders In Q2 2024: 100

Section: Gaining Popularity

QUALCOMM Incorporated (NASDAQ:QCOM) is one of the biggest semiconductor design companies in the world. The firm’s products form the backbone of the global smartphone industry as it provides CPUs, GPUs, neural processors, and a variety of other products that are also used in other industries such as CV2X. QUALCOMM Incorporated (NASDAQ:QCOM) also benefits from a two-tier business model which allows it to earn money by selling its chips and license revenue from the products that its chips are used in. Its exposure to the smartphone and personal computing industry is important in the AI age since QUALCOMM Incorporated (NASDAQ:QCOM) can leverage its expertise to develop hardware that allows customers to use on-device AI. Yet, its reliance on the consumer industry also means that the firm struggles when consumer spending is muted. As an illustration, QUALCOMM Incorporated (NASDAQ:QCOM)’s stock fell by 12% in August after its December quarter growth in the mid-single digits disappointed analysts and fueled worries that the smartphone market was taking its sweet time to recover.

Aristotle Capital Management mentioned QUALCOMM Incorporated (NASDAQ:QCOM) in its Q2 2024 investor letter. Here is what the fund said:

“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.”