Meetings with Qualcomm Inc's (NASDAQ:QCOM) CFO Akash Palkhiwala and people from the Investor Relations team indicated that the company's datacenter strategy is focused on solving challenges related to power and memory and that datacenter revenues from NPUs (neural processing units) and CPUs (central processing units) could become a "multi-billion dollar opportunity in a couple of years," according to JPMorgan.
The Qualcomm Analyst: Analyst Samik Chatterjee reiterated an Overweight rating on the stock.
The Qualcomm Thesis: Qualcomm's diversification efforts have continued to show strong results, "with more than 20% growth CAGR in Automotive and IOT in the last 5-years, the steady proliferation of AI within all end-markets, and an emerging datacenter market opportunity," Chatterjee said in the note.
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Qualcomm's expansion into adjacent markets could accelerate the company's growth beyond its historical 5-year CAGR, he added.
This suggests that Qualcomm could be "the least expensive" AI semiconductor stock for investors, while other AI-related stocks have had a strong run over the last 18 months, the analyst stated.
Among the key takeaways from meetings with Qualcomm's management were:
- The company's performance-per-watt advantage in edge devices can be extended to datacenters, where it is becoming increasingly important for AI applications.
- Although datacenter revenues are expected to ramp in fiscal 2027, revenues from NPUs and CPUs could represent a multi-billion-dollar opportunity over a couple of years.
QCOM Price Action: Qualcomm shares were down 0.57% at $169.91 at the time of publication on Monday, according to Benzinga Pro data.
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