Buy Qualcomm Stock
Qualcomm's (QCOM 1.85%) stock tumbled nearly 8% during after-hours trading on Nov. 2 in response to its latest earnings report. For the fourth quarter of fiscal 2022, which ended on Sept. 25, the chipmaker's non-GAAP revenue rose 22% year-over-year to $11.39 billion, which beat analysts' estimates by $40 million. Its adjusted earnings increased 23% to $3.13 per share, which matched the consensus forecast.
buy qualcomm stock
Qualcomm's growth rates seem robust, but they represent a significant deceleration from previous quarters. The company's downbeat outlook for the upcoming fiscal year also shattered investors' hopes for a quick recovery. Let's take a closer look at Qualcomm's slowdown, its near-term challenges, and whether or not it's still worth buying in this rough market for semiconductor stocks.
Analysts expect Qualcomm's revenue and adjusted EPS to grow 5% and 2%, respectively, in fiscal 2023. Based on those estimates, Qualcomm's stock still looks cheap at just 9 times forward earnings. But I believe those estimates are still too high in light of its latest report, so its actual forward valuation might be a bit higher. Its forward yield of 2.6% looks decent, but it also won't attract any serious income investors as long as the three-month treasury's yield exceeds 4%.
Simply put, Qualcomm's stock isn't a screaming bargain yet. Investors would arguably be better off investing in a better-diversified chipmaker like Texas Instruments than Qualcomm, which remains tightly tethered to the cyclical smartphone market, as the bear market drags on.
Add to that the fact that technology stocks in general have been weighed down because of high inflation and fears of a recession, and it becomes crystal clear why Qualcomm's (QCOM 1.85%) stock is down 23% over the past year.
That drop has caused some investors to wonder whether Qualcomm's stock is a good buy right now. To answer that question, let's take a closer look at what's going right with Qualcomm and what could hold the company back.
Qualcomm's share price decline over the past year has opened up a buying opportunity for tech investors looking for a good deal. The company's current price-to-earnings ratio is just 11.5 right now, making the stock the cheapest it has been in years.
Qualcomm stock reset its sights beyond its traditional smartphone markets as key customer Apple (AAPL) mulls its own iPhone 5G chips. The wireless chip giant expects strong dividend growth. Is QCOM stock a buy in February 2022?
Shares of Qualcomm rose 3.2%, near 155, March 9 amid the dividend hike. Qualcomm stock jumped above the 200-day moving average in intraday trading after undercutting that level Monday. The chip stock remains well below the 50-day average.
The 5G chip stock is trying to hold at its 200-day moving average, after consolidating for more than eight weeks. Despite the earnings beat last month, shares took a hit from the broader, tech-led selloff due to fears about inflation and rising rates. There is no new buy point for now .
QCOM stock was a laggard for most of 2021, hit by a report that Apple could make its own iPhone modem chips, cutting out Qualcomm. It rebounded late in the year on strong earnings and management's vision for an Apple-light future.
Qualcomm stock earns an EPS Rating of 88 out of a best-possible 99, and its SMR Rating is an A, on a scale of A to a worst E. The EPS rating scores a company's earnings growth vs. other companies, and its SMR Rating scores sales growth, profit margins and return on equity.
Top stocks to buy or watch among fabless chip companies include AMD (AMD), Nvidia (NVDA), Monolithic Power Systems (MPWR) and Lattice Semiconductor (LSCC). Several of those make chips for data centers, which are in high demand as internet use booms during the work-at-home push.
AMD stock and Nvidia stock have been big winners for most of the past three years. But in January's sell-off, which has hurt growth stocks especially hard, both AMD and NVDA have tumbled harder than Qualcomm stock.
Chip stocks, including NVDA and AMD, often earn a spot on the IBD Leaderboard, a curated list of stocks with the most potential for big gains. They also often appear on the IBD 50 list of top growth stocks.
Computershare Trust Company is our transfer agent and administers a direct stock purchase plan and a dividend reinvestment program for Qualcomm Incorporated. To find out more about these programs you may contact Computershare directly at:
Investing in QUALCOMM is not without risk. First, I would like to highlight that many of QUALCOMM's growth verticals, including the metaverse, IoT expansion and AI-driving technology, are entrepreneurial bets. They can pay-off handsomely, but there is no guarantee. Secondly, QUALCOMM is hoping to expand in the data center server chip technology, but an important related verdict for the lawsuit with UK-based ARM is still pending. Finally, investors should consider that sentiment towards risk assets such as stocks remains strongly depressed. And given multiple macroeconomic headwinds, QCOM stock may suffer from share price volatility even though the company's fundamentals remain unchanged.
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Zacks' proprietary data indicates that QUALCOMM Incorporated is currently rated as a Zacks Rank 3 and we are expecting an inline return from the QCOM shares relative to the market in the next few months. In addition, QUALCOMM Incorporated has a VGM Score of B (this is a weighted average of the individual Style Scores which allow you to focus on the stocks that best fit your personal trading style). Valuation metrics show that QUALCOMM Incorporated may be undervalued. Its Value Score of B indicates it would be a good pick for value investors. The financial health and growth prospects of QCOM, demonstrate its potential to outperform the market. It currently has a Growth Score of C. Recent price changes and earnings estimate revisions indicate this stock lacks momentum and would be a lackluster choice for momentum investors.
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