How Qualcomm Achieved Record Revenues in Q2 2024

In the second fiscal quarter, the company achieved strong financial results, with non-GAAP revenues of $9.4 billion and earnings per shareEarnings per share (EPS) is a fundamental financial metric that provides valuable insights into a company's profitability. This widely used indicator helps investors and analysts g... More (EPS) of $2.44, exceeding guidance expectations. Revenues from the chipset business totaled $8 billion, driven by robust demand for premium-tier Android smartphones and growth in the automotive sector. The licensing business contributed $1.3 billion in revenues. Significant advancements were made in technology and product roadmaps, particularly in on-device AI applications and automotive solutions.

The company introduced the Qualcomm AI Hub to facilitate the development and commercialization of AI applications, with a focus on various device platforms. In the automotive sector, the Snapdragon digital chassis continued to lead, with a substantial increase in the design win pipeline to approximately $45 billion, projecting automotive revenues to surpass $4 billion by fiscal 2026. The company also announced several new technologies and product launches across different sectors, including next-generation AI PCs, advanced cellular modems, and augmented reality solutions.

Insights

• The company’s strategy focuses on diversification and leadership in emerging technologies.
• Strong demand in premium smartphones and automotive sectors underpin financial performance.
• New product launches and technological advancements are set to drive future growth.

The Essence (80/20)

The core topics for understanding the company’s strategy and performance include:

1. Diversification Strategy: Expanding beyond traditional markets into automotive, AI PCs, and IoT, aiming for leadership in these sectors.
2. Technological Advancements: Launching new products like the Snapdragon X80 modem and AI Hub, which highlight the company’s commitment to innovation.
3. Financial Performance: Strong revenue and EPS growth, exceeding expectations, particularly driven by the chipset and automotive businesses.

The Action Plan

1. Strengthen Technology Leadership: Continue investing in R&D to maintain a competitive edge in on-device AI and 5G technologies.
2. Expand Market Share in Automotive and IoT: Leverage the increased design win pipeline to secure long-term contracts and partnerships in these sectors.
3. Enhance Product Offerings: Roll out new platforms and models across different tiers to meet diverse market demands.
4. Focus on Sustainable Growth: Implement strategies that balance short-term returns with long-term investments in emerging technologies.

Blind Spot

One potential overlooked detail might be the reliance on a few high-performing sectors such as premium-tier smartphones and automotive. Diversifying into additional markets or further innovation in mid-tier products could mitigate risks associated with market saturation or reduced demand in these sectors.

QCOM Technical Analysis

Volume:

• The trading volume for the day is 13,113,500, which appears consistent with recent trends, indicating sustained interest and activity in the stock.

Relative Strength IndexIn the world of technical analysis, the Relative Strength Index (RSI) stands as a cornerstone tool for traders seeking insights into market momentum. Developed by J. Welles Wilder ... More (RSI 14):

• The RSI is at 47.09, which is near the neutral 50 mark. This suggests that the stock is neither overbought nor oversold at the current level.

On Balance VolumeThe On Balance Volume indicator (OBV) is a technical analysis tool used to measure the flow of money into and out of a security over a specified period of time. It is a cumulative ... More (OBV):

• The OBV line is trending upwards with a current reading of 231,303,698. This indicates that volume on up days has generally been higher than volume on down days, supporting a bullish outlook.

Stochastic RSIIn the realm of technical analysis, the Stochastic RSI (StochRSI) emerges as a powerful tool for traders seeking to navigate market dynamics with precision. Developed by Tushar S. ... More:

• The Stochastic RSI indicator is at 0.400, which is near the lower bound of its range, suggesting potential undervaluation or a near-term buying opportunity as the stock might be considered oversold.

Average Directional IndexThe Average Directional Index (ADX) stands as a cornerstone indicator in the toolkit of technical traders, offering insights into the strength of market trends. Developed by Welles... More (ADX 14):

• The ADX is at 20.52, which indicates a weak trend strength. This suggests that while the overall direction has been bullish, the trend is not particularly strong at the moment.

Chaikin OscillatorNamed after its creator Marc Chaikin, the Chaikin Oscillator stands as a formidable tool in the arsenal of technical analysts. This oscillator is designed to measure the accumulati... More:

• The Chaikin Oscillator is at -3,498,179, showing that there is some downward pressure in terms of accumulation versus distribution, which could be a bearish signal in the short term.

Overall, Qualcomm Inc. shows a bullish medium to long-term trend based on its position relative to the moving averages and OBV. However, the short-term indicators like Stochastic RSI and Chaikin Oscillator suggest some caution may be warranted. Investors should keep an eye on these indicators for potential shifts that could impact the stock’s direction. Remember, past performance is not an indication of future results. Always consider conducting your own research.

Book Recommendations

1. “AI Superpowers” by Kai-Fu Lee – Provides insights into the rise of AI and its implications on global industries.
2. “The Innovator’s Dilemma” by Clayton M. Christensen – Discusses how companies can maintain growth through innovation and disruptive technologies.
3. “The Third Wave” by Steve Case – Explores how the next wave of the internet will reshape the economy with IoT and AI at the forefront.