Analysts Hail Qualcomm’s Auto Design Pipeline Due To Market Prospects

Qualcomm Inc (NASDAQ:QCOM) hosted its first-ever Automotive Investor Day in New York City.  The key data point is that the lifetime…
  • Qualcomm Inc (NASDAQ:QCOM) hosted its first-ever Automotive Investor Day in New York City. 
  • The key data point is that the lifetime automotive design pipeline has increased by $11 billion in the past month and a half to $30 billion. 
  • For more near-term metrics, FY26 automotive revenue target is now $4 billion+ in FY26, up from $3.5 billion previously, and $9 billion+ in FY31, up from $8 billion previously. 
  • Automotive will likely be $1.3 billion in FY22. 
  • Qualcomm moved its Snapdragon Platform from vehicle connectivity to digital cockpit applications and now gaining momentum in ADAS/AD. 
  • Rosenblatt analyst Kevin Cassidy reiterated a Buy and $220 price target on Qualcomm.
  • He saw the Veoneer / Arriver software stack acquisition as driving the critical ingredient to Qualcomm’s ADAS success. Expectations were set for design win announcements during CES 2023. 
  • Also, many other opportunities would likely be closed within the next two years. 
  • The Qualcomm bears may point to these wins as lower-level processing and not the domain processor, but he liked the progression of lower-end CPU designs to higher end in the long-term wins strategy.
  • Barclays analyst Blayne Curtis reiterated Equal Weight and a $160 price target.
  • Curtis found it well-positioned within next-gen Auto designs with a stronghold in connectivity, growth in the digital cockpit, and emerging presence in ADAS/AD. 
  • Though Auto is a strong growth driver over the next decade+, the story is still heavily levered to Mobile, where NT Android trends are weaker and likely result in estimate revisions. 
  • Wells Fargo reiterated an Equal Weight and $150 price target.
  • It highlighted how Qualcomm focused on the Snapdragon Digital Chassis enabling transformation in the automobile. 
  • While Qualcomm’s automotive revenues represent only $1.3 billion, or ~3%, of total revenues today, it saw a significant opportunity to grow automotive revenues driven by accelerating trends within automotive. 
  • The analyst found it difficult for QCOM shares to outperform peers based on constrained LT growth prospects specific to the mature mobile handset market, which still drives ~60% of QCT sales.
  • Price Action: QCOM shares traded lower by 2.36% at $120.75 on the last check Friday.
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