Hello everyone, this week's [Speed of Opportunity], let's analyze one of the most popular chip stocks recently: Qualcomm (QCOM)

Will Qualcomm shake Intel and AMD's position on the PC side?

Qualcomm has long been known for mobile chips, while the PC chip market has been dominated mainly by Intel and Ultra-Micro Semiconductor (AMD). However, with the development of AI technology, this market landscape may change.

On May 20, Microsoft announced the latest generation of Surface Laptop and Surface Pro tablets, with CUP powered by the high-end Snapdragon X Elite and X Plus chips.

Other PC makers, such as Lenovo, Dell, HP, Huawei, Acer and Samsung, will also launch AI PCs with Qualcomm chips.

This means that the chip architecture of PCs in the future will shift more from x86 to ARM architecture, and Qualcomm's Snapdragon X Elite chips are designed with ARM architecture, which undoubtedly offers Qualcomm a potential opportunity to enter and divide the PC chip market.

How big is this market?

Analysts at the Bank of America believe that the market size for AI PCs is about 6 million, and it is expected that the market size may expand further in 2025.

While Intel and AMD may launch more powerful AI chips in the future, Qualcomm currently takes the lead in the AI PC market. If Qualcomm continues to penetrate the PC chip market, this business will be one of the main drivers of the company's future growth.

How much revenue can AI PC bring to Qualcomm?

I'm sure many investors are wondering, how much revenue does AI PC performance actually contribute to Qualcomm?

Qualcomm's main business is currently divided into two main segments, namely QCT (chip business) and QTL (technology licensing business).

In Q2 FY 2024, Qualcomm reported total revenue of $93.89 billion, with QCT chip business accounting for 85.48%.

At the FY2024 Q2 earnings call, management indicated that the PC business will only contribute in FY 2025, and the company will provide more details in the next quarter. The financial guidance for the current third quarter does not yet include too many references to the PC business.

But analysts gave some predictions for reference. Bank of America analysts predict that Qualcomm will occupy 70% of the market share of the AI PC market.

On the revenue side, they expect the AI PC business to contribute an additional $2.86 to $8.61 in revenue to Qualcomm by 2025.

On the earnings per share side, they expect the AI PC business to contribute an additional 6 to 19 cents in earnings per share by 2025 and a further 13 to 27 cents in 2026.

For reference, Qualcomm's total revenue for fiscal 2023 was $358.2 billion, with earnings per share of $6.42.

Technical analysis

Driven by AI PC hype, Qualcomm's share price hit an all-time high of $216.54 in May.

On the daily chart, Qualcomm's share price has risen since the start of November 2023, rising to 42.61% since 2024, narrowly beating the S&P 500 and Nasdaq indices.

Indicator reading:

• Trend Analysis

Investors can analyze the trend through the Futubull's channel line, and see the higher generic stock market against the uptrend and try to move up the bullish channel most recently. In general, a stress channel can dull and share prices can move forward in a negative way, without worrying about investors, this can be a real stress, but a holiday rush.

• Trend is strong and weak

The MACD indicator can be used to analyze the strength of the trend, the MACD shows a dead fork, and the column chart turns negative, which may indicate that the upside is weakening.

Direction of attention:

AI PC is one of the most popular investment topics in 2024. The main logic is that with the gradual introduction of AI PC products, it may bring a wave of switching to PCs.

Qualcomm's share price is heading for a high after 2024, one of the main reasons being its layout on AI PCs.

In the short term, although the CCD price has recently broken through the upward channel, the MACD indicator shows a short-term peak. In the event of a stock price pullback, investors can look out for the creeping pushes along and down the channel.

In the long run, investors need to keep an eye on the progress of the high-end AI PC business, with management saying that more information will be revealed in the next quarter to focus on how the management team expects the PC business to the company's revenue.

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Risk Disclosure: This content does not constitute research reports and is for reference only and does not serve as a basis for any investment decisions. The information referred to in this article is not a comprehensive description of the securities, markets or developments described. Although the source of information is considered reliable, the accuracy or completeness of the above is not guaranteed. In addition, the accuracy of any statements, opinions or predictions made in this article is not guaranteed.

This content discusses technical analysis, and other approaches, including fundamental analysis, may provide different perspectives. The examples provided are for illustrative purposes only and do not reflect the expected results.