Qualcomm, Inc. (QCOM) has struggled more recently. Still, since the beginning of 2020, it has outperformed the S&P 500, rising by approximately 49.3% compared to the S&P’s gain of about 21.9%. Hedge funds and institutions actively bought the stock in the fourth quarter. The technology company was added to the WhaleWisdom Whale 100 Index on February 18, 2021.
Qualcomm is a multinational wireless technology company that creates semiconductors, intellectual property, software and offers wireless related services. The company was a driving force behind the development and expansion of 5G for mobile phones. Its subsidiary, Qualcomm Technologies, Inc., is known for its research and development functions and robust patent portfolio that includes patents critical to mobile communications standards. Despite the negative impact of the coronavirus pandemic on many businesses, Qualcomm has benefited from the strong demand for 5G network infrastructure and devices. The pandemic has shifted consumer habits and practices to work remotely more and less in-person socializing. While advances in technology have enabled companies and individuals to adapt quickly, the need and desire to stay connected continues to grow.
Hedge Funds Are Buying
Both Hedge funds and institutions are buying Qualcomm stock. Reviewing the top hedge funds’ fourth-quarter activity, the aggregate 13F shares held increased to about 153.3 million from 151.6 million, an increase of approximately 1.1%. Of the hedge funds, 38 created new positions, 128 added to existing holdings, 39 exited, and 160 reduced their position. Overall, institutions increased their aggregate holdings by about 1.0%, to approximately 856.5 million from 848.0 million.
Multi-year Estimates Offer Encouragement
Analysts expect to see earnings rise over the next two years, with increases in year-over-year growth of 75.9% and 11.1% in 2021 and 2022, respectively, to $8.01 from $7.37. Revenue is estimated to increase year-over-year from 2021 until 2024 to $34.2 billion in 2024 from $31.1 billion.
Positive Outlook Despite Production Challenges
Piper Sandler Co.’s analyst, Harsh Kumar, is bullish on the stock, raising their rating from Neutral to Overweight and increasing the price target to $160 from $150. Kumar noted growth opportunities for Qualcomm’s handset devices and that Qualcomm was trading cheaply compared to other large/mega cap semiconductor companies. Reuters reported that the soaring demand for Qualcomm’s processor chips for smartphones has resulted in a shortage. Qualcomm appears to be temporarily struggling to meet higher than anticipated demand from Android smartphone makers, in part due to a lack of some subcomponents used in its chips. Qualcomm executives are promoting encouraging second-quarter sales forecasts in the range of $7.2 to $8 billion due to demand.
Future Holds Promise
While the coronavirus pandemic has been a hurdle, Qualcomm’s jumping forward with momentum as demand increases for its technology and services. As individual consumers, workforces, and governments realize that faster, reliable connectivity and streaming are increasingly critical during a global pandemic, Qualcomm faces the challenge of keeping up with demand. With primarily optimistic estimates from analysts, steady growth, and positive actions from hedge funds and institutions, the future is encouraging for investors.