Qualcomm investor event updates highlight diversification potential: JP Morgan

Updates from Qualcomm (NASDAQ:QCOM) at its investor event highlight the potential of diversification for the San Diego-based chipmaker, investment firm J.P. Morgan said.

Shares were down fractionally in premarket trading on Wednesday.

“Qualcomm’s IoT and Automotive Diversification Investor Day surpassed investor expectations in terms of potential diversification away from smartphone market by end of the decade, with the target of reaching 50% non-smartphone QCT exposure by FY30, vs. JPM expectation of 45% heading into the event,” analyst Samik Chatterjee wrote in a note to clients.

He has an Overweight rating and $200 price target on Qualcomm.

While the financial targets (such as $14B in revenue from its Internet of Things unit by fiscal 2029) laid out by Qualcomm’s management may outline a “robust” path to diversification, investors are more likely to be focused on the upside and downside risks of the Internet of Things targets after the company fell short when it laid out a prior plan in 2021; and the outlook for the smartphone market in the intermediate term, Chatterjee added.

Even still, there is still a “strong upside opportunity from a re-rating of the shares on achieving the planned diversification,” Chatterjee said.