Morgan Stanley Bullish on Qualcomm (QCOM.US) AI Boom: Leaving Single-Chip Smartphones Behind
Morgan Stanley's latest research report highlights Qualcomm's (QCOM.US) business landscape shifting from a single-chip smartphone focus to a diversified portfolio, with growth drivers across PC, automotive, and IoT segments. This multi-engine growth model has the potential to propel Qualcomm's third-quarter earnings and entire 2025 fiscal year performance above street expectations.
In addition, Morgan Stanley emphasizes that Qualcomm's business diversification has positioned it as a rare gem among semiconductor stocks, with both defensive attributes and long-term growth potential. The company's stable patent licensing (QTL) business, coupled with its multi-faceted semiconductor portfolio, including AI-enabled smartphones, AIPC, and automotive chips, has strengthened its defensive posture.
Qualcomm's core strategy is centered around edge AI, which involves deploying AI models directly on terminal devices, reducing latency and data transmission risks. The company's Snapdragon SoC, Oryon CPU+NPU, and QCS/QRB series chipsets provide local AI inference acceleration for AI-enabled smartphones, PCs, automotive, and IoT devices.
Morgan Stanley highlights that PC is becoming a new growth catalyst for Qualcomm, particularly in the area of AI-powered notebooks. The company is developing an ARM-based architecture with integrated AI acceleration, targeting the AI notebook market's innovation opportunities.
Qualcomm's automotive chip business has shown impressive growth, maintaining a high-speed growth rate of around 30% YoY. The company has accumulated over $30 billion in automotive chip orders, positioning itself for continued strong earnings performance.
The report emphasizes that Qualcomm's diversified strategy has resulted in a significant increase in its anti-cyclical capabilities. When one single market (e.g., smartphones) slows down, other growth drivers can provide a buffer. For instance, even if Qualcomm loses its long-term major customer Apple, its overall earnings guidance remains resilient, thanks to the company's diversification.
Morgan Stanley Reiterates Bullish View, Raises Target Price to $200
Morgan Stanley's report outlines its long-term earnings forecast and valuation logic for Qualcomm. The company reiterates its "Buy" rating and raises the target price to $200, citing the strong growth potential of its edge AI-powered business, PC market opportunities, and automotive chip progress.
The report emphasizes that Qualcomm's edge AI capabilities, combined with its diversified business portfolio, position it for long-term growth and increased valuation multiples. The company's strong earnings performance and potential for future growth have led Morgan Stanley to reiterate its bullish view.