The smartphone market remains sluggish, and Qualcomm (QCOM.US) has stepped up its diversification strategy, winning unanimous praise from Wall Street.
1min read Zhitong Finance APP noticed that Wall Street investment banks said that Qualcomm's latest news released at its investor event highlighted the potential diversification of the chipmaker.
Samik Chatterjee, an analyst at Morgan Stanley, wrote in a report: "Qualcomm's IoT and automotive diversified investor day exceeded investors' expectations, and Qualcomm will achieve diversification from the smartphone market to other markets before 2030, targeting a 50% non-smartphone QCT exposure in fiscal 2030, while Morgan Stanley expected this ratio to be 45% before the event.
He rated Qualcomm "overweight" and set a target price of $200.
Although the financial targets set by Qualcomm's management (such as the revenue of its IoT segment reaching $14bn in fiscal 2029) may outline a "steady" diversification path, investors are more likely to focus on the upside and downside risks of IoT targets, as the company's previous plans in 2021 failed to achieve. Chatterjee added that the medium-term outlook of the smartphone market is also not optimistic.
Nevertheless, Chatterjee said, "there is still a strong upside opportunity to re-evaluate the stock after achieving the planned diversification."
Other research firms have similar ideas, including Tristan Gerra, an analyst at Baird, who said that the company's relevance in multiple industries is "increasing." Srini Pajjuri, an analyst at Raymond James, said he was "impressed" by Qualcomm's diversification strategy, but issues related to its modems for Apple may "keep revenue/earnings growth muted for the next 2-3 years."
Moreover, Qualcomm CEO Cristiano Amon told the media on Wednesday that no large acquisition target has been determined yet, and there are speculations that it may bid for Intel as early as next year.