Goldman Sachs’ Top Growth Investors: 34 Stocks With The Highest Investment For Growth

28. QUALCOMM Incorporated (NASDAQ:QCOM)

Growth Investment Ratio: 82%

Number of Hedge Fund Holders: 100

QUALCOMM Incorporated (NASDAQ:QCOM) is one of the biggest and most important semiconductor design firms in the world. Its processors and graphics processors power most of the world’s smartphones. QUALCOMM Incorporated (NASDAQ:QCOM) operates through a two-fold business model, generating revenue through chip sales and licensing revenue. Its presence in the smartphone industry as the go-to for chips provides QUALCOMM Incorporated (NASDAQ:QCOM) with a wide moat particularly since in-house chips are costly to design and produce. On the flip side, the firm might face headwinds in the future if British design house Arm Ltd. continues its business transformation of offering firms a one-stop-shop solution of chip designs that simply have to be manufactured by contract manufacturers like TSMC. QUALCOMM Incorporated (NASDAQ:QCOM) and Arm are already locked in a legal dispute regarding design rules, and the firm’s dependence on the smartphone market also leaves it vulnerable to cyclical downturns.

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.”