Why Is Qualcomm Stock Trending Today?

Qualcomm is trading in the green today after investment firm Citi increased the company’s price target to $132 from $102 and maintained a Buy rating for the stock. Citi analyst Christopher Danely believes 5G remains the biggest catalyst for the stock, which can boost Qualcomm’s annual earnings by 43% through 2021.

Qualcomm is also in the news lately after it announced Snapdragon 750G mobile processor, which features an integrated X52 modem that supports both mmWave and sub-6 GHz 5G.

The processor would offer 10% better graphics rendering than the Snapdragon 750G. Qualcomm plans to launch its first ever 750G devices in the market by the end of 2020.

There has been a lot of pressure on Qualcomm from government authorities over its dominance in the chips industry. But a US court decided in favor of the company recently. Qualcomm also came out triumphant in its legal battle with Huawei. According to a report which cites a document published by the United States International Trade Commission, Apple will use Qualcomm chips in its 5G smartphones until at least 2023. Apple’s upcoming 5G smartphone will have Snapdragon X55 5G modem.

The 5G Factor

5G is without a doubt one of the biggest reasons behind Qualcomm’s strength. 5G is going to disrupt the markets globally. According to a study, 5G markets are going to touch a value of over $11 trillion by 2025. Apart from 5G smartphones, Qualcomm can tap its dominance in the chips industry and increase profits from domains like mass virtualization, cloud, edge, and functional splits.

In the fourth quarter, Qualcomm expects its revenue to jump by almost 15% to 31% year over year with 36% to 60% earnings growth despite the coronavirus effects.

The Huawei Ban?

The U.S. government’s decision to blacklist Huawei dented Qualcomm’s position in the market as former was the company’s major customer. However, Qualcomm is proactively lobbying to pursue the Trump administration to allow it to sell some chips to the Chinese company. Recently, Huawei said that Qualcomm applied for a license to sell it chips that Huawei will use in its smartphones if the U.S. government allows. Analysts believe that Qualcomm will be able to get some waivers from the U.S. government and its business with Huawei will partially come back to normal.