We Like Qualcomm’s Focus on Diversification at its Investor Day; Raising FVE to $163 Per Share

On Nov. 16, Qualcomm hosted an investor day at which management discussed its outlook for the firm’s prospects. Notably, Qualcomm’s guidance assumes the firm will have only 20% share of Apple’s 2023 iPhone model, as it expects Apple to deploy its own modem by that time. While this is sooner than we had anticipated, we’re not surprised that Qualcomm expects Apple to shift to an internal modem solution, and we expect Qualcomm to be able to achieve midteens chip business, or QCT, growth via the ongoing 5G transition at Android OEMs as well as momentum in RF front-end, automotive, and IoT. We’re raising our fair value estimate to $163 per share from $144, as we incorporate the stronger growth outlook for narrow-moat Qualcomm’s QCT segment. However, with the stock up over 30% over the past two weeks, we recommend prospective investors seek a wider margin of safety before committing capital to the stock.