Qualcomm Inc (QCOM) is riding high on a wave of positive sentiment, with its stock soaring after prominent analyst Ming-Chi Kuo issued a bullish forecast for the company’s Snapdragon 8 Gen 4 processor. Kuo’s analysis indicates that Qualcomm’s stock price has already absorbed the potential negative impact of Apple’s (AAPL) move to develop its own 5G chips, setting the stage for a strong performance in the coming months and years.
Kuo expects Qualcomm to benefit from robust momentum in the final quarter of 2024 and beyond, driven by several key factors. The analyst highlights the growing demand for AI-powered smartphones and PCs, which is expected to boost demand for Snapdragon 8 Gen 4 processors. This, combined with increased System on Chip (SoC) prices due to the adoption of Taiwan Semiconductor Manufacturing Co’s (TSM) advanced 3-nanometer process, is poised to significantly benefit Qualcomm’s bottom line.
Among Qualcomm’s mobile SoCs, the Snapdragon 8 Gen 4 (SD8G4) stands out as the most expensive and profitable. Kuo predicts that the bulk of SD8G4 shipments will occur in the fourth quarter of 2024, with a projected 50% increase in shipments compared to its predecessor, the SD8G3, reaching an estimated 9 million units. This substantial increase, coupled with a 15% jump in average selling price (ASP) to $180, is set to contribute significantly to Qualcomm’s fourth-quarter 2024 revenue and earnings.
The analyst attributes the surge in SD8G4 shipments to a longer shipping period, increased demand from Samsung, and favorable developments in the Chinese smartphone market. China’s Golden Week holiday sales saw a remarkable 20% growth in smartphone shipments, with Chinese brands capturing an impressive 80% market share, outpacing Apple’s stagnant performance. Kuo believes this trend will likely continue through the fourth quarter of 2024, further fueling demand for Qualcomm’s processors.
Kuo also anticipates continued growth in the high-end smartphone market in China, predicting a rise in market share from 25-30% in 2023 to 30-35% in 2024. Overall, he forecasts a 3% increase in Chinese smartphone shipments to 280 million units in 2024, with continued growth expected in 2025.
This optimistic outlook for Qualcomm’s Snapdragon 8 Gen 4 and the broader smartphone market has been met with enthusiasm by investors, with QCOM stock climbing 3.32% to $175.63 at the close of trading on Monday. The company’s future appears bright, driven by the increasing adoption of AI technology, favorable market dynamics, and the continued demand for premium smartphones.
