- Cathie Wood has invested $9.13 million in Qualcomm (QCOM) shares post-earnings via ARK Innovation ETF (ARKK), following earlier purchases, showcasing confidence in the company’s growth potential.
- Qualcomm’s Q1 sales hit $11.67 billion with adjusted profits of $3.41 per share, exceeding expectations, largely due to a 13% rise in handset revenue and expansion into automotive and IoT markets.
- The company’s diversification away from just smartphones is evident with a 20% increase in chipmaking revenue, particularly with a 61% growth in automotive sales, leading to a stock performance that outpaces major indices.
Cathie Wood, through her ARK Innovation ETF (ARKK), has shown significant faith in Qualcomm Inc. (QCOM) by investing in $9.13 million worth of its shares shortly after the company’s robust earnings report. This investment follows Wood’s earlier acquisition of Qualcomm stock, made ahead of the company’s Feb. 5 earnings release, indicating her confidence in the company’s future, especially given its strategic position in the tech ecosystem. Qualcomm’s earnings for the fiscal first quarter were notably strong, with sales reaching $11.67 billion and adjusted profits per share at $3.41, both exceeding market expectations, driven by a 13% increase in handset revenue and growth in automotive and IoT sectors.
Qualcomm’s business extends beyond just smartphone components; its Snapdragon processors and modem chips are integral in a variety of products from self-driving cars to AI-powered PCs and VR headsets. This diversification is evident in the 20% increase in its chipmaking business (QCT) revenue to $10.1 billion, with the automotive segment showing a remarkable 61% growth to $961 million. This expansion into new markets is seen as a strategic move to mitigate reliance on the smartphone market, which has been Qualcomm’s traditional stronghold but is now complemented by these emerging sectors.
The company’s patent portfolio, particularly in 5G technology, remains a significant revenue source, compelling companies like Apple (AAPL) and Samsung to pay licensing fees irrespective of whether they use Qualcomm’s hardware. Following the earnings, Qualcomm provided a Q2 guidance that further exceeded expectations, with projected revenue and EPS both topping consensus estimates. This performance has led to positive reactions from analysts, including TD Cowen raising its price target to $195 from $180 with a ‘Buy’ rating. The firm cited Qualcomm’s solid results and guidance, driven by record handset revenue. However, they also noted that investors are focusing on the flat year-over-year outlook for Qualcomm Technology Licensing (QTL) revenue, especially with Huawei royalty revenue removed.
Qualcomm’s stock however, has reacted positively, closing at $167.96 on Friday, up 9.33% year-to-date, and outperforming broader market indices like the Nasdaq Composite (COP) and S&P 500 (SPX), which gained 1.10% and 2.45%, respectively. This performance, combined with Cathie Wood’s investment, underscores a market sentiment that views Qualcomm not just as a mobile technology leader but as a key player in the expanding fields of automotive, IoT, and AI technologies.
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