QCOM Stock Forecast for 2022: Growth with 5G Speed

Adi Raved This QCOM Stock Forecast for 2022 article was written by Adi Raved – Financial Analyst at I Know First.

Highlights

  • QCOM, with an ROE of 115.9% and a Net Margin of 26.94%, is one of the most profitable companies in the Semiconductor industry
  • Institutional Investors prefer to buy QCOM
  • Increasing the long-term demand for 5G chips in the Automotive industry
(Source: commons.wikimedia.org)

Overview

Qualcomm Incorporated is an American multinational corporation headquartered in San Diego, California. It creates semiconductors, software, and services related to wireless technology. It owns patents critical to the 5G, 4G, CDMA2000, TD-SCDMA and WCDMA mobile communications standards. Qualcomm was established in 1985 by Irwin M. Jacobs and six other co-founders. The company invents breakthrough technologies that transform how the world connects, computes, and communicates.  Qualcomm contributed significantly to the creation and development of many products and technologies such as 5G, which enabled smartphones that double as pro-level cameras and gaming devices, connectivity solutions that keep you connected even in remote areas, smart infrastructures, and smart, connected factories.

QCOM Stock Forecast for 2022: Communication and Connectivity in COVID-19 Era

Technology 5G Icon - Free image on Pixabay
(Source: pixabay.com)

As the years go by, our world is becoming increasingly global in the way people can communicate through wearable devices. The mission of technology is to minimize interruptions when people interact. The 5G  technology is critical nowadays as it creates the conditions for faster transfer of larger amounts of data, making any activity more efficient. Consequently, consumers are increasingly showing their preference for the virtual world and want to optimize the use of their communication resources. Similarly, businesses want to take advantage of the wider range of opportunities that arose in this dynamic and global economic system. As a leading innovator in wireless technology available worldwide, Qualcomm is expected to capitalize on the anticipated surge in demand for smartphones as this is the place where its technologies are absorbed the most.

The automotive industry continues to adopt advanced connectivity and compute technologies from mobile. QCOM inked agreements with leading car manufacturers ( Volvo VLVLY, Honda Motor Co., Ltd. HMC and Renault SA RNLSY) to supply automotive chips for their upcoming models. Volvo will leverage Qualcomm’s ”Snapdragon Cockpit” chips for the production of its electric SUV, which are likely to go into production this year. Honda will use Qualcomm automotive chips for vehicles rolling out in 2023. Renault did not specify which models will use Qualcomm chips. Qualcomm has launched the automotive platform “Snapdragon Ride” which enables automakers to transform their vehicles into self-driving cars using Artificial Intelligence (AI). Snapdragon’s scalable platform comprises the Snapdragon Ride Safety System-on-a-Chip (SoC), Accelerator and the Snapdragon Ride Autonomous Stack. The combination of these self-driving algorithms facilitates a robust architecture of hardware and software that supports advanced driver assistance systems like automatic emergency braking, traffic sign recognition, lane-keeping, self-parking and automated highway driving technology, commonly known as Level 1 and Level 2 systems.

On top of that, the ongoing outbreak of coronavirus, as well as subsequent outbreaks driven by new variants, such as the Omicron variant, and government restrictions forced people around the globe to stay home day after day for a very long while. After an initial shock, the extended-stay indoors has resulted in new trends such as remote working, distance learning, and telehealth.  Those trends helped accelerate the adoption of fast, reliable wireless technologies and drive the demand for connected devices and networking equipment. According to survey data, 79% of executives plan to allow employees to continue to work remotely at least part-time, and over 70% of employees want flexible remote work options to remain in place. In the United States alone, the virtual care market is expected to grow at a compound annual growth rate of 40% through 2025, signaling projected demand for remote connectivity. Another implication of the COVID-19 pandemic is that global supply chains and shipments slowed, causing worldwide shortages and affecting consumer patterns, a problem that QCOM clearly had to face too.

According to GuruFocus, QCOM is one of the most profitable companies in the Semiconductor industry. QCOM’s ROE of 115.9 is better than 99.76% of companies in the industry. The Operating Margin of 29.16% is higher than 90.43% of companies in the industry. This can exhibit the company’s excellent profit generation ability.

QCOM Stock Forecast - Financial Ratios
Source: gurufocus.com
(Figure 1 – QCOM vs Semiconductor Industry)

Following these strong financial indicators, there has been a strong trend of large buy quantities of the company by institutional investors. This trend is well depicted in the figures below from the past 12 months

(Source: marketbeat.com)

QCOM looks interesting in terms of Piotroski F-Score and Altman Z-Score. Piotroski F-score is a number between 0 and 9 that is used to assess the soundness of a company’s financial position. A score of 7 may indicate that the company’s stock is undervalued and can be interpreted by investors as a good signal to buy the stock. The Altman Z-score is the result of a credit test that measures the likelihood of a publicly owned manufacturing company going bankrupt. It is also at a safe level for QCOM.

QCOM Stock Forecast - Piotrosky F-Score and Altmaz Z-Score
(Source: GuruFocus)

Furthermore, QCOM’s current P/E ratio of 23.24, and P/S ratio of 6.16 appears to be undervalued against its peers. Moreover, given the company’s technology leadership, its solid financial performance, and other factors we discussed, these price ratios can also represent and be in line with the company’s potential and further growth.

QCOM Stock Forecast - PE Ratio
QCOM Stock Forecast - PS Ratio

QCOM Stock Forecast for 2022: Conclusion

I believe that QCOM is a buy stock due to some reasons. First, QCOM is one of the most profitable companies in the Semiconductor industry. In addition, there is a positive inflow from institutional investors. Moreover, the great recent advancement in the automotive industry and the huge importance of the 5G technology in the post-Corona era, makes it reasonable to assume that the prosperity trend will continue during 2022.

QCOM Stock Forecast

It is worth paying attention that the stock-picking AI of I Know First has a high signal on the one-year market trend forecasts, supporting my position for the QCOM stock forecast. The dark green for all forecasts is a strong bullish signal.

Here at I Know First, our AI-based stock forecast algorithm has modeled and predicted assets price movement worldwide for short-term and long-term time horizons, ranging from 3 days to a year. The database used is 100% historical data free from human-derived assumptions and is constantly evolving with newly added data and adapting to changing market situations. Today, we are producing daily forecasts for over 10,500 assets such as forex forecasts, as well as gold predictions, while also providing the latest Apple stock news. These forecasts generated by our quant trading tool are used by institutional clients, as well as private investors and traders to identify the best investment opportunities in the market.

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