Qualcomm: The AI Growth Inflection Point Is Close (Rating Upgrade)

Core Viewpoint - Qualcomm has faced a significant bear market, with a 35% decline from its peak in June 2024, but recent earnings have calmed investor nerves and indicated potential growth in AI and automotive sectors [1][2]. Group 1: Financial Performance and Market Position - Qualcomm's fiscal third-quarter earnings exceeded Wall Street estimates, suggesting increased market confidence in its AI growth prospects [2]. - The automotive segment saw an 87% revenue increase, highlighting Qualcomm's successful diversification efforts beyond its core handset business [2]. - Qualcomm's premium market share in smartphones has grown to 31%, up from 21%, indicating strong demand for AI-capable devices [2]. Group 2: Competitive Landscape and Future Opportunities - Intel's challenges in its foundry roadmap may provide Qualcomm with a competitive edge in the AI PC market, which is projected to account for 50% to 60% of overall PC shipments by 2027 [3]. - Qualcomm's entry into the AI PC market is seen as timely, leveraging its mobile processor expertise, although significant market share gains may not be realized without stronger forward guidance [3]. Group 3: Growth Outlook and Investor Sentiment - Qualcomm is expected to return to topline growth and maintain stability through FY2026, but profitability growth is anticipated to be modest, leading to cautious investor sentiment [4]. - Despite a "D-" growth grade indicating skepticism about diversification efforts, Qualcomm's strong profitability grade suggests it remains a fundamentally strong stock [4][5]. - The stock has shown robust buying sentiment around the $150 support level, with an upgrade to "Buy" justified based on improved risk/reward profile [5].