Qualcomm Stock Prediction: Qualcomm Heavily Investing In Technological Breakthroughs

The article was written by Aline Rzetelna, a Financial Analyst at I Know First.

 Qualcomm Stock Prediction

Summary:

  • Qualcomm Fourth Quarter and Fiscal 2017 Results
  • Investing in Innovation
  • Qualcomm Rejects Bid Offer
  • I Know First Bullish Forecast on QCOM

Qualcomm Incorporated is an American multinational semiconductor and telecommunications equipment company that develops, designs, manufactures, and markets digital communications products and services. Qualcomm’s main goal is to invent mobile technology breakthroughs. QCOM’s technologies powered the smartphone revolution pioneering 3G and 4G. Moreover, it revolutionized industries, including automotive, computing, IoT, healthcare and data center, while it allows millions of devices to connect with each other. The company has most of its revenues from chipmaking and the bulk of its profits from its patent licensing businesses. QCOM is among the members of the S&P 100. Founded in 1985, Qualcomm has its headquarters in San Diego, California.

Qualcomm Releases Its Fourth Quarter and Fiscal 2017 Results

On November 1st, Qualcomm released its Fourth Quarter and Fiscal 2017 Results ended September 24. According to CEO Steve Mollenkopf, QCOM results reflected continued product leadership and profitability improvement in their semiconductor business.

The company presented fourth quarter revenues of $5.9 billion, showing an increase of 10% from its previous quarter, when it was $5.4 billion. QCOM operating cash flow grow 16% in a year-over-year change, reaching $2.4 billion in this quarter. Moreover, Qualcomm operating income and net income were respectively $0.3 billion and $0.2 billion in the Q4 fiscal 2014. Its diluted earnings per share stayed at $0.11.

According to the Non-GAAP results, the company showed an increase in its revenues, operating income, net income and diluted earning per share in comparison with the previous quarter, as you can see bellow. According to QCOM Non-GAAP Fiscal 2017, the company’s revenues of $23.2 billion decreased only 1% from Fiscal 2016, when it was $23.5 billion.

Furthermore, Qualcomm has also announced a quarterly cash dividend of $0.57 per common share, payable on December 15, 2017, to stockholders of record at the close of business on November 29, 2017.

Despite the negative impact of the legal dispute between Apple and Qualcomm on the company’s results, Mollenkopf stated that he sees strong growth trends for global 3G/4G device shipments. In his words: “We are leading the industry to 5G and are well positioned with our product and technology leadership to continue our expansion into many exciting new product categories, such as automotive, mobile computing, networking and the  Internet of Things.”

Investing In Innovation

Qualcomm Centriq 2400

Qualcomm Inc is heavily investing in developing new technologies and bringing innovation to its sector. The company has designed the Qualcomm Centriq 2400. This impressive server processor, which is the world’s first and only 10 nanometer server processor, marks the beginning of a new era of economics and energy efficiency for operating a datacenter.

After five years of work for the Qualcomm Datacenter Technologies team, the first high-performance Arm-based processor series, designed to offer groundbreaking throughput performance for cloud workloads running in today’s datacenters, is officially on commercial shipment. The single-chip delivers exceptional performance-per-watt and performance-per-dollar.

According to senior vice president and general manager, Anand Chandrasekher: “We have designed the most advanced Arm-based server processor in the world that delivers high performance coupled with the highest energy efficiency, enabling our customers to realize significant cost savings.”

5G

The pioneer at 3G and 4G, is now leading the way to 5G – The New Era of Intelligent Connected Devices. The 5G mobile technology will benefit entire economies and entire societies, while it will advance mobile technologies connections.

IHS Markit, the world leader in critical information, analytics and expertise to forge solutions for the major industries and markets that drive economies worldwide, evaluated the potential of 21 unique 5G use cases that will affect productivity and enhance economic activity across a broad range of industry sectors.

According to data provided by Qualcomm Inc., IHS Markit concluded that 5G mobile technology could produce up to $12.3 trillion worth of goods and services in a broad range of industries – from retail to education, transportations and entertainment. Moreover, it can support a thriving value chain, generating up to $3.5 trillion in revenue by 2035 and supporting up to 22 million jobs.

Furthermore, it is expected that 5G can deeply contribute to the Real Global GDP growth in an amount of $3.0 trillion (see chart bellow), from 2020 to 2035. IHS Markit concluded that 5G technology would contribute very large and sustainable economic benefits across all sectors of the global economy, while having a profound effect on how people live, work, and interact, elevating living standards for people all around the world.

Qualcomm Rejects Broadcom’s Bid – Deal Could Have Solved Problems With Apple

Recently, Broadcom offered to buy the chipmaker Qualcomm for about $7o per share. The bid of more than $100 billion for QCOM, if accepted would be the biggest transaction in this industry.

Expectations were that the deal would fix Qualcomm’s problems with Apple. The two tech giants are embroiled in a patent lawsuit, in which Apple alleges fraudulent royalty charges, and Qualcomm alleges patent infringement.

Qualcomm refused to close the unsolicited deal saying that the offer “dramatically” undervalued the company and that it came with significant regulatory uncertainty. After that, QCOM shares went up 1.8%, while those of Broadcom went down 0.4%.

I Know First Bullish Forecast on QCOM

Whilst Qualcomm is heavily investing in innovation and technological breakthroughs, I rate this stock as a buy. In accordance with the I Know First forecast from November 16, 2017, the company seems to have a strong potential for growth in the short, medium and long term.

Past I Know First Success with QCOM

I Know First has made accurate predictions on Qualcomm Inc (NASDAQ:QCOM) in the past, such as those published on August 9th, 2017 an October 11th, 2017.

On the prediction published on August 9th, 2017, QCOM was assigned a signal strength of 3.66 and a predictability factor of 0.61 for the 3-months period (August 9th, 2017 – November 9th, 2017). Accurately predicted, QCOM shares rose 23.54% over this period in line with the I Know First algorithm’s forecast. See chart below.

(Souce: Google Finance)

Moreover, on this prediction from October 11th, 2017, QCOM showed the best return for the Tech Giant package. As you can see below, I Know First attributed a signal of 31.12 and a predictability of 0.44 for QCOM, which returned 19.86% after the one month period.

 

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

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