Qualcomm Inc's (NASDAQ:QCOM) latest quartertly numbers came with "somewhat lackluster" guidance but showed strong glimpses of a good "story" emerging, investment banks said.
First-quarter results released after-hours on Wednesday were better than expected, driven by strong automotive and handset semiconductor revenues, said Bank of America (BofA), which reiterated a 'Buy' rating on the stock with a $173 price objective versus the $143 the shares fell to on Thursday.
The quarter was boosted by China Android inventory restocking, UBS noted, and Android phone shipments "should track consumption" from now on - although Appple "still sounds like a headwind" over the next several quarters.
Automotive sales were better than expected and Qualcomm's Internet of Things arm was "about in-line" with guidance, "implying that autos still holds in better than peers and IoT starts to come back out the other side".
Looking at specific positives, BoA noted that higher demand for smartphones related to the recent launch of Samsung's flagship S24 device, as well as solid overall demand across the Android ecosystem.
The US investment bank countered that guidance "was somewhat lackluster, calling for flat handset trends in both 2Q and 3Q" while analysts also flagged Huawei re-entering the Chinese 5G handset market as "a key risk factor".
Overall, BoA believes the global handset market "should recover" in 2024, while over the long-term AI is expected to have a positive impact on demand and average selling prices.
AI was of course also a theme in the UBS note, with the Swiss bank, which said the good story is that "as AI pushes to the edge in a new era of computing and QCOM is now more of a processor company that happens to have a modem and modem technology".
UBS also sees PCs as a "compelling" opportunity and could add a "few $B of revenue a few years from now", though smartphones are still going to represent around 65-70% of operating profit into 2026 and "QCOM's position is under duress - to varying degrees - at both AAPL and Samsung".
Overall, the Swiss bank kept its target price unchanged at $150 and maintained its 'Neutral' rating.