Why Is Qualcomm Stock Going Up? QUALCOMM (NASDAQ:QCOM) share price has been gaining a lot of traction thanks to the company’s Snapdragon platform, which features advanced AI processing capabilities.
In the last month, Qualcomm’s stock has risen by about 9%, and over the past year, it is up by 13%. But what’s been the cause for the optimism this year and will it persist?
Automotive Dominance
In January, Qualcomm broadened its reach in the auto industry by forming a partnership with Sony Honda Mobility Inc. The Snapdragon® Digital Chassis™ solution will be used to power SHM’s upcoming AFEELA vehicles, a partnership that highlights Qualcomm’s status as a leader in the growth of software-defined vehicles.
This move not only strengthens the company’s market leadership but also secures its position as the provider of advanced digital car systems. The growing application of Qualcomm’s technology to car makers is translating to revenue growth and industry dominance.
Qualcomm has even expanded its presence to India’s growing market of electric vehicles. Working with Mahindra & Mahindra Ltd., it has brought Snapdragon® Digital Chassis™ to Mahindra’s first electric SUVs—the BE 6 and XEV 9e.
These partnerships fit well with Qualcomm’s core competence to generate revenues from paid licenses in one of the fastest-growing car markets.
Strong Partnerships
Beyond the electric vehicle sector, Qualcomm has been working with Panasonic Automotive Systems for some time now. PAS uses Snapdragon® Cockpit Elite to power its Cockpit Domain Controllers and High-Performance Computer systems.
This has led to the installation of Qualcomm’s artificial intelligence engines in more cars, which in turn has led to higher market share.
Hyundai Mobis and Qualcomm also partnered with QCOM with a view to changing high-power computing for the next car generation by combining Snapdragon Ride™ Flex SoC and Snapdragon Ride™ Automated Driving Stack. This makes Qualcomm important in new car entertainment systems and driver-helper features.
Plus, at the 2025 CES event, Qualcomm Technologies and Garmin Ltd. (NYSE:GRMN) shared the news about Garmin Unified Cabin™ 2025, which uses Snapdragon® Cockpit Elite, pushing Qualcomm into the digital cockpit field.
Q4 Highlights
In FY 2024, Qualcomm’s non-GAAP revenues went up 18.2% from last year to $10.24 billion. Operating income rose 82.9% from last year’s figure to $2.58 billion. Also, the company’s non-GAAP earnings before taxes rose 33.4% compared to the same quarter last year to $3.49 billion.
Non-GAAP net income and non-GAAP earnings per share increased by 33.3% and 33.2% from the previous year’s quarter to reach $3.04 billion and $2.69, respectively.
As of September 29, 2024, Qualcomm had total current assets of $25.23 billion, which is higher compared to $22.46 billion on September 24, 2023. Total assets amounted to $55.15 billion, up from $51.04 billion on September 24, 2023.
Shareholder Returns
Qualcomm continues to be a good choice for investors. In its most recent announcement, the company declared a quarterly cash payment of $0.85 per common share, which will be offered on March 27, 2025, and is for investors owning shares by March 6, 2025.
Qualcomm has grown its dividends for 21 consecutive years and pays an annual dividend of $3.40, which translates to an annual dividend yield of 1.99%.
The company has grown its dividends at a CAGR of 7.2% over the past five years. Its four-year average dividend yield is 2.11%.
Profitability Metrics
Qualcomm’s profitability ranks among the best in the semi industry with gross profit margin for the past 12 months of 56.21% higher by 12.1% versus the average in this field. The trailing-12-month EBITDA margin of 30.69% is 191.2% higher than the average of this sector, which is 10.54%.
The stock’s trailing-12-month net income margin of 26.03% is 574.8% higher than the average net income margin of this sector, which is 3.86%. Also, Qualcomm’s past 12-month levered free cash flow margin of 22.90% is about 103.1% above the typical industry margin of 11.27%.
Also, its asset turnover ratio over the last year, which is 0.73x, surpasses the sector norm by about 20.4%, clocking in at just 0.61x. Cash from operations over the last twelve months amounts to $12.20 billion, which stands in comparison to an average of $96.06 million in the industry.
Analyst Sentiment
For the fiscal 2025 first quarter, which finished in December 2024, analysts expect the company’s revenue and EPS to grow by 9.7% and 7.6% year-over-year respectively to $10.89 billion and $2.96.
For the fiscal 2025 second quarter that ends in March, analysts are forecasting revenues and EPS to increase by 10.1% and 10.9% from the previous year to $10.34 billion and $2.71, respectively.
Bottom Line
Analysts calculate a price target of $202.93 per share which translates to an18.55% increase from how much the stock is worth now. Also, Qualcomm’s stock looks like a good deal because it trades at a forward non-GAAP P/E ratio of 15.28x, which is 39.3% under the average for its industry, 25.16x.
The company’s forward EV/EBITDA of 11.94x is 24.9% less than the industry’s average, which is 15.89x. Plus, the stock has a forward price-to-cash ratio of 13.06x, which means it is 39.4% lower than the normal rate in this sector, which stands at 21.54x.
The strength of Qualcomm is growing in the areas of automotive, AI, and cloud computing. Plus, strong financials and high profits put the company for success over time. The bottom line is Qualcomm’s shares seem ready for a longer period to increase trend. The numbers tell the story, and the market is listening.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.
