Qualcomm Inc. is one of the reasons why we can use all the modern devices today. Maybe, you don’t see the products of this company directly, but without them, many other things wouldn’t simply work. Qualcomm is one of the biggest international corporations that work on the creation of software solutions, semiconductors, and other products necessary for mobile communication and wireless technologies.
The company has greatly evolved since the date of its creation in 1985. Today, it owns several patents important for the development of such technologies as 5G, 4G, and others. In today’s review, we will find out what are the advantages and disadvantages of investing in the QCOM stock in 2022.
Performance of the Company
In 2020, Qualcomm Incorporated generated $23.5 billion. This result was slightly worse than the year before. Nonetheless, the company managed to recover in 2021. According to the 2021 annual report, the total amount of revenue exceeded $33.5 billion. This is a 69% year-over-year increase.
Sales of the company increased as well. They surged 41%, compared to the previous year. The increasing number of sales was also reported after the first quarter of 2022. This growth is caused by the increasing demand for the supply of chip-based products. The demand was caused by the shortage at the beginning of the year.
Analysts predict that in 2022 the annual sales will also increase, in comparison with the previous year. The expected growth is 32%. The earnings are expected to grow as well. Experts say this will be a 50% increase per share. Specialists estimate that in 2023, the demand for the company’s product won’t be surging like this year.
Key Events
- The report for the last fiscal quarter of 2020 exceeded the estimates of Wall Street. Because of it, the stock surged by 12.75%. On 31 December 2021, it was closing at $152.34.
- The last quarter of 2021 was quite successful for the company. Experts forecasted that it would generate $8.9 billion from sales. Qualcomm managed to beat these estimates and reported earnings of 9.3 billion. Thanks to increasing revenue in the last quarter, the QCOM stock price increased 13.3%. On December 15, 2021, the stock reached its all-time maximum of $189.28. Today, it’s traded at $122.16.
- Qualcomm provides chips not only to digital companies but to vehicle brands as well. On May 3, it was announced that Qualcomm will supply chips for Volkswagen. This is a great deal because Volkswagen is one of the most famous carmakers in the world. It’s the largest vehicle manufacturer. Successful partnership with such a brand must be beneficial for the QCOM stock price in the future. After the announcement of the deal, the QCOM stock price surged from $144 to 149 but then dropped to $132 in a week.
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Pros
- Qualcomm is a very important participant in the industry. It owns several crucial patents that might determine the development of the technologies. These technologies are gaining popularity with the progress. That way, the work of Qualcomm will be always on-demand.
- The mobile market is growing at a big pace. New technologies are implemented so the market constantly needs resources to improve the performance of these technologies.
- Qualcomm shows great financial performance. Its quarter earnings beat the estimates of the industry experts.
- The company has a well-established and reputable brand. This allows the business to put less effort and resources into efficient promotions campaigns.
- If the company beats the estimates for the second quarter of 2022, the QCOM stock price will increase again.
Cons
- Brands and governments might launch lawsuits against the company because of concerns that it abuses its patents to increase royalties. This negatively impacts the reputation of the brand and the willingness of investors to put money into it.
- The competition in this industry is very intense. Obviously, with such competitors, Qualcomm won’t be able to show better-than-expected sales after every quarter.
Final Thoughts
In passing two years, Qualcomm increased the dynamics of growth. Now, the company is on the go and it might be a good idea to invest in the QCOM stock from the long-term perspective. Whatever you consider more significant, advantages or disadvantages, keep in mind that nobody can predict what the market will be like tomorrow. It’s always risky and it always requires deep research. Here you have just our recommendation based on fundamental data and the history of the stock. To follow it or not - it’s your choice.