Jon Hadad

About the Author Jon Hadad

Jon Hadad graduated from the University of Delaware with a degree in political science. Prior to joining the Smarter Analyst team, he was an industry analyst at a New York research firm.

Should Investors Buy Qualcomm (QCOM) Stock on 5G Strength?

Who’s the most powerful company in tech? Ask an investor or person on the street and you’re bound to hear many answers — from Apple to Amazon, Microsoft to Google. But one answer you probably won’t hear is Qualcomm (QCOM). Perhaps the chip-maker should be considered.

Qualcomm and Apple are engaged in a long-standing feud across multiple continents and courtrooms. While many express hope that the two will come to an agreement soon, which will include a new licensing deal for Qualcomm technology, so far there has been nothing. But amid the feud, it seems Apple is missing out on “the next big thing” — 5G. As Qualcomm is being hailed as the leader in 5G technology, Apple’s decision to go with Intel — some blame as a result of the feud with Qualcomm — is pushing the launch of a 5G iPhone back to 2020, as opposed to this year had the phone-maker elected to use Qualcomm.

But this power isn’t making Edward Snyder of Charter Equity any more bullish on the mobile chip giant as he reiterates a Market Perform (i.e Hold) rating on Qualcomm stock. (To watch Snyder’s track record, click here)

The hope for a Apple-Qualcomm 5G relationship isn’t anything new — Snyder says Wall Street “has been rife with speculation Apple would settle with Qualcomm to get its hands on a working 5G modem” since 2018, as the company knew “Intel couldn’t deliver a part in time for the 2020 iPhone launch.”

Snyder believes the “rumor” of the reunion sparked Qualcomm stock to rise artificially, though the “bubble” popped when “Apple made a statement through Reuters disabusing the story.” And though “Intel’s notable absence from the 5G modem parade at MWC resurrected the story [of an Apple-Qualcomm 5G partnership]”, the analyst says his “latest rounds of checks lead us to discount these alternatives and reinforce our belief iPhone 2020 will feature Intel modems for both the 4G and 5G radios.”

Snyder is actually pretty concerned about the relationship between the two companies. He says, “the blood between Qualcomm and Apple is as bad as we’ve ever seen, certainly worse than Qualcomm’s fight with Nokia in 2008 and on par with its 2010 war with Broadcom which it lost in an expensive defeat.” There is “close to $10B in claims for royalties and damages” at stake, with slim chances “that this fight gets resolved over a late modem, especially after three years of iPhone sales declines with and without Qualcomm’s modems.” While 5G is expected to be a big advancement, the analyst does not believe 5G will have such an impact as to bring the companies together.

All in all, the sell-side community is mixed on Qualcomm stock. TipRanks analysis of 17 analyst ratings shows a Moderate Buy consensus, with seven analysts recommending Buy and nine analysts recommending Hold. The average price target among these analysts stand at $63.62, which reflects an 11% rise from current levels. (See QCOM price targets and analyst ratings on TipRanks)

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