Qualcomm: Propelled by Strong User Acceptance of Snapdragon for AI and ARM-based PCs and Smartphones
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Qualcomm reported strong Q2 earnings, surpassing analyst expectations with adjusted per-share earnings of $2.44 and adjusted revenues of $9.39 billion.
Qualcomm's revenue from ARM-based Snapdragon-equipped laptops is expected to grow significantly $2.295 billion in 2024 to $9.607 billion by 2028.
Qualcomm's revenue from ARM-based Snapdragon-equipped smartphones is expected to grow $18 billion in 2024 to $19.75 billion by 2028.
In this article, I analyze the company Qualcomm, in light of product announcements at Computex 2024 and the keynote address by CEO Cristiano Amon. In this article I present two forecasts from 2023-2028 for the company:
· Analysis of Qualcomm in Windows PCs and ARM Adoption
· Analysis of Qualcomm in AI-based Smartphones
Introduction
Mobile chipset major Qualcomm (QCOM) has seen its stock rise by a solid 41% year-to-date. Several factors are driving the recent gains for the company, including signs of a recovery in the smartphone market and optimism that the generative AI trend will boost smartphone sales.
Chart 1 shows QCOM’s 1-year share price growth, which is compared with the S&P Technology Sector Index (^IXT).
Qualcomm also published a better-than-expected set of fiscal 2Q2024 results on May 1, 2024, with guidance for Q3 also coming ahead of estimates. The company projects revenue between $8.8 billion and $9.6 billion for Q3, marking an increase of over 13% at the upper end of guidance, with earnings expected between $2.15 and $2.35 per share.
While the smartphone market experienced a lull in 2023 due to the easing of the Covid-19 pandemic and economic uncertainty weighing on consumer spending, the outlook has improved recently. According to Canalys, worldwide smartphone shipments grew 11% YoY in the first quarter of 2024. This growth is helping Qualcomm’s CDMA Technologies segment, which supplies application processors, modems, and software for mobile devices, networking equipment, and consumer electronics. The surging interest in generative artificial intelligence is also benefiting Qualcomm.
The company is seeing higher demand for high-end chipsets like the Snapdragon 8 Gen 3, optimized for AI applications, including enhancing voice assistants and generating images.
At Snapdragon Summit, Qualcomm announced its latest premium mobile platform, the Snapdragon 8 Gen 3.
ASUS, HONOR, IQOO, Meizu, NIO, Nubia, OnePlus, OPPO, Realme, Redmi, REDMAGIC, Sony, vivo, Xiaomi, and ZTE have all confirmed that they’ll release Snapdragon 8 Gen 3 phones, according to Android Authority.
As a result, Qualcomm is experiencing increased demand from China, where local OEMs have upped their uptake by over 40% compared to last year, as demand for premium Android devices grows at the expense of Apple’s iPhone.
Analysis of Qualcomm in Windows PCs and ARM Adoption
Qualcomm’s chips are also gaining traction in the PC market, with vendors deploying AI natively into computers. In May, Microsoft and other Windows PC manufacturers announced new computers with AI features using Qualcomm’s Snapdragon X Elite and Snapdragon X Plus processors. The X Elite processor includes an integrated Neural Processing Unit (NPU) specifically designed for executing machine learning algorithms.
The global PC market is expected to grow moderately over the next few years. According to IDC, the total PC shipments are projected to grow by an average of 2% annually from 2024 to 2028.
ARM-based solutions are gaining traction in the PC market due to their power efficiency and integration of AI capabilities. Based on current trends and industry forecasts, ARM-based PCs are expected to capture an increasing share of the market. Companies currently
Qualcomm's Snapdragon processors, with their focus on power efficiency and AI integration, are well-positioned to capture a significant portion of the ARM-based PC market. Based on historical data and industry analysis, we estimate Qualcomm’s market share in ARM-based PCs to grow steadily.
The forecast below in Table 1 demonstrates Qualcomm’s significant revenue potential from ARM-based Snapdragon-equipped laptops over the next five years. With increasing adoption of
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Data for this article came from our report:
Hot ICs: A Market Analysis of Artificial Intelligence (AI), 5G, Automotive, andMemory Chips.
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