On Wednesday, Piper Sandler included Qualcomm (NASDAQ: QCOM) as one of the stocks with the most extreme upside in Q2 2024, placing it among the top performers in their Portfolio Strategy report.
Despite some broader market challenges, Qualcomm’s standout performance has been driven by a significant number of factors, suggesting robust growth potential.
Q3 earnings outlook
Qualcomm’s upcoming Q3 2024 earnings report is eagerly anticipated, with an announcement date set for July 31, 2024. The market is looking forward to seeing if the company can meet or exceed the expected EPS of $1.79 and revenue of $9.21 billion.
If it does, it will show an impressive year-over-year growth following a strong Q3 2023, where Qualcomm reported $8.45 billion in revenue and an EPS of $1.52.
In its latest earnings report from May 2024, Qualcomm reported a Non-GAAP EPS of $2.44, beating expectations by $0.12, and revenue of $9.39 billion, surpassing estimates by $40 million.
The company’s guidance for Q3 2024 projects revenue between $8.8 billion and $9.6 billion and Non-GAAP EPS between $2.15 and $2.35, indicating sustained confidence in its growth trajectory.
Drivers of growth
One key driver of Qualcomm’s recent success has been the resurgence of the Chinese Android market. Analysts from Mizuho Securities and Oppenheimer have noted Qualcomm’s gains in market share, particularly with its Snapdragon 8 Gen 3 AI and new product launches.
The company’s automotive pipeline has also grown significantly, now valued at $45 billion, highlighting its diversification efforts.
Qualcomm’s strategic partnerships and innovative products continue to fuel its growth. The collaboration with Ampere Computing on AI chips for the cloud and the launch of the Snapdragon X Plus chip for PCs are noteworthy.
The company’s impressive diversification into generative AI and new market segments has further bolstered its growth prospects.
Qualcomm’s foray into ARM-based AI CPUs with its Snapdragon X Elite chip and partnerships with major tech companies like Microsoft further strengthen its growth outlook.
In legal news, Qualcomm recently agreed to a $75 million settlement to resolve a shareholder lawsuit over its sales and licensing practices. While the company denied any wrongdoing, this settlement allows Qualcomm to focus on its business operations without the distraction of ongoing litigation.
Valuation-wise, Qualcomm remains attractive compared to its peers. With forward P/E ratios now hovering around 20.18x, it stands competitively against companies like Broadcom and Intel.
Having gone through the company’s fundamentals now let’s see what the charts have to say about the stock’s price trajectory.
This analysis will delve into Qualcomm’s recent price movements, support and resistance levels, and potential future trends based on technical indicators.
Previous all-time high acting as support
Qualcomm’s stock went through an extended downtrend after making its previous all-time high at $193.58 in early 2022. This downtrend lasted until October 2023 with the stock bottoming out around $105.
Since October 2023, the stock has seen an aggressive bull run, more than doubling in price during this time and making a new all-time high at $230.63 on June 18.
After this rapid ascent, the stock saw a minor retracement to the $193.6 level, taking support near its previous all-time high.
Currently, the stock is providing a low-risk entry to investors who are bullish on the stock but haven’t bought it yet.
They can buy the stock near $200 levels currently keeping a stop loss at $193.5. If the current short-term bullish momentum continues we can see it making new all-time highs soon.
Traders who are bearish on the stock must refrain from shorting it above $193.5. If the stock does give a daily closing below it, short positions can be initiated with a stop loss at $203.95.
If the bearish momentum intensifies, the stock will next find support near $162, where one can book profits.
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