Qualcomm Shares Slide Following Investor Day - Analysts Impressed

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By Sam Boughedda

Qualcomm (NASDAQ:QCOM) shares are down over 2%in early Friday trading following the company's first-ever Automotive Investor Day event.

At the event, the company announced its automotive design-win pipeline has grown to $30 billion. They said the growth has been driven by increased adoption of its Snapdragon Digital Chassis solutions.

"The increase represents a greater than $10 billion expansion since the company's fiscal third quarter results were announced," stated Qualcomm in a press release.

Following the investor day event, a Morgan Stanley analyst said the company "gave significant color on their recent material (and to us, somewhat unexpected) successes in the automotive space which we have noted over the last three quarters, adding $11 bn to the long term pipeline vs. just 8 weeks ago."

"We have been impressed by the run of design wins from Qualcomm in the ADAS business - including BMW, General Motors, Stellantis, and Volkswagen, all with L2+ ADAS wins slated to ramp in 2025 or so; this was backed up by the financial information that the company gave," the analyst added, who has an Overweight rating and $170 price target on Qualcomm.

A Deutsche Bank analyst said in a note that the company highlighted "the breadth and flexibility of its differentiated technology portfolio and its unique go-to-market strategy that has enabled it to gain significant share in the automotive segment." The analyst maintained a Buy rating and a $170 price target on the stock.

A BofA analyst explained that "Qualcomm expects autos revenue to reach $1.3bn in FY22, growing to $4bn+ by FY26 and $9bn+ by FY31."

"Overall, Qualcomm remains a key leader in mobile and should continue to benefit from growth of its non-handset segments. We maintain our Buy and $180 PO," the BofA analyst added.

Finally, Rosenblatt Securities said the key data point for the investor day event was the lifetime automotive design pipeline increasing by $11 billion in the past month and a half to $30 billion.

"We see the Veoneer / Arriver software stack acquisition as driving the key ingredient to Qualcomm's ADAS success. Expectations were set for design win announcements during CES 2023. Also, many other opportunities are expected to 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 we like the progression of lower end CPU designs to higher end in the long term wins strategy," wrote a Rosenblatt analyst.