Will Qualcomm’s Share Price Surge With New Snapdragon Processor?

Nvidia dominates the software market for AI developers, but Qualcomm, along with several big tech names, including Google and Intel, wants to break its stranglehold. The chipmaker is also enabling generative artificial intelligence (AI) capabilities to be brought to smartphones.

Qualcomm [QCOM] is a semiconductor giant, perhaps best known for making smartphone chips, particularly its Snapdragon platform for Android.

Data from Stockcircle shows that while four ‘super investors’ bought $32.4m-worth of Qualcomm shares in Q4 2023, nine offloaded a total of $228.3m.

Most notably, Ray Dalio, Founder and former CEO, Chief Investment Officer (CIO) and Chairman of Bridgewater Associates, cut his stake by 80%, selling approximately 303,000 shares. Ken Griffin, Founder, CEO and Co-CIO of Citadel, sold approximately 326,000 shares, reducing his holding by 26.2%.

Meanwhile, Steve Cohen, Chairman, CEO and President of Point72, started a new position in the chipmaker, having exited in the first half of 2023, buying approximately 179,000 shares.

Jim Simons, founder of quant fund Renaissance Technologies, also started a new position, having exited in Q3 2023, with just 8,560 shares.

George Soros, Co-founder of the Quantum Fund, pared down his stake by 44.8%, selling 24,400 shares, while Appaloosa Management Founder David Tepper offloaded 300,000 shares, reducing his position by 23.1%.

3 ETFs with Qualcomm in their top 5 holdings5 days performance
Invesco Semiconductors ETF+0.98%
First Trust Nasdaq Semiconductor ETF+0.67%
Global X Autonomous & Electric Vehicles ETF+0.66%

Data correct as of Wednesday, 3 April.

The Smartphone Market Recovery

After a prolonged period of sluggish demand for smartphone chips, the market seems to have turned a corner in the last few months of 2023. Qualcomm shipped $6.69bn of smartphone chips in Q1 2024, which ended 24 December, up 16% from the year-ago period. This compares with a 22% decline in sales to $22.6bn for the whole of 2023. 

“We see the Android market stabilising after we’ve been [through] 2023. That was a year of correction,” said Qualcomm President and CEO Cristiano Amon on the earnings call held on 31 January. The chipmaker expects global handset sales to be flat for the current fiscal year.

The company’s Internet of Things segment, which includes the chips that Meta [META] incorporates into its virtual reality headsets, reported sales dropping 32% year-over-year to $1.1bn.

Amon confirmed on the Q1 2024 earnings call that the Snapdragon Elite X, “the AI super-charged platform to revolutionise the PC”, as the company itself describes it, will launch in laptops in the middle of the year.

Challenging Nvidia

While Qualcomm is far from the biggest name in the AI theme, it is making big moves in the space.

Last week, Reuters reported that the company is one of a number of tech giants, among them Alphabet’s [GOOGL] Google Cloud, Intel [INTC], Samsung [005930:KS] and Arm [ARM], to have joined forces to challenge Nvidia’s [NVDA] AI dominance.

The group, named the Unified Acceleration or UXL Foundation, is developing open-source software. It hopes this will free AI developers from being locked into Nvidia’s CUDA software, which is currently used by more than four million developers worldwide.

“We’re actually showing developers how you migrate out from an Nvidia platform,” Vinesh Sukumar, Qualcomm's Head of AI and Machine Learning, told the news agency.

As well as taking on AMD [AMD], Intel and Nvidia in the AI PC race, Qualcomm is also pushing the generative AI opportunity in smartphones with its Snapdragon 8 Gen 3, which launched last October.

“We are bringing [generative] AI capabilities to smartphone users worldwide,” said Amon in his annual shareholder speech last month. “Our leadership in premium- and high-tier Android devices continues with our latest Snapdragon mobile platforms, which now feature significantly enhanced AI processing performance.”

Modest Share Price Rise

If Qualcomm is successful in helping to chip away at Nvidia’s AI software dominance, then it could potentially lead to more super investors snapping up shares.

Qualcomm’s share price gain in the past year through 2 April is a modest 41.2%, and it’s up 19.3% year-to-date.

However, this performance pales in comparison to the meteoric rise of Nvidia’s share price — up 223.2% in the past year and up 82.5% year-to-date. AMD’s share price is up 89.9% and 24.4% in the respective periods.

Qualcomm may not yet have attracted as much attention from investors looking to capitalise on the AI frenzy, but it could be considered an underrated play on the theme. Instead of holding the stock outright, exposure can be gained through thematic ETFs.

The Global X Artificial Intelligence & Technology ETF [AIQ] has Qualcomm as its seventh-biggest holding, with a weighting of 3.1% as of 1 April. The fund is up 39.8% in the past year through 2 April and up 9.6% year-to-date.

The WisdomTree Artificial Intelligence and Innovation Fund [WTAI] also has Qualcomm as its seventh-biggest holding, with a 2% weighting. The fund is up 19.6% in the past year and up 0.7% year-to-date.

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