Chart Source: Poemsview 8th Feb 2021
Qualcomm has been a household brand and commands a strong position among the semiconductor stocks. The company report its first quarter earnings last Wednesday. Adjusted earnings beat expectations but Qualcomm’s sales were slightly lower than what Wall Street expected, sending the stock lower in extended trading. Sales were up 63% year-over-year while earnings grew 119%, powered by increased chip sales tied to a surge in demand for 5G handsets partly due to covid lockdown.
“We delivered an exceptional quarter, more than doubling earnings year-over-year due to strong 5G demand in handsets and growth in our RF front-end, automotive, and IoT adjacencies, which drove record earnings in our chip business,” said CEO Steve Mollenkopf. “We remain well-positioned as the 5G ramp continues and we extend our core technology roadmap to adjacent industries.“
Both revenue and earnings came in strong as Qualcomm’s business was propelled by smartphones adopting 5G as well as the electronics boom during the pandemic. Recall that during the onset of the coronavirus pandemic, chip orders initially collapsed and that undoubtedly put a dent in QCOM stock price. However, as remote work and studying became the new normal, the demand for chips increased dramatically.
The demand outstrips supplies as there is a faster adoption towards 5G and eventually chip companies like TSMC will ramp up their production thus allowing Qualcomm to benefit in the longer run. The demand for 5G chipset is only going to get higher over time.
So lets see the chart for possible support points. There is a horizontal gap support of around $143 which will be our first support. Next level will be at around $133. Always scale in for your investment and not go in all at once. In this case, average down when the stock goes lower is one of our investment strategy. Qualcomm is down around 13% since the high.
Keep a look out for this counter as a one of the 5G play.