QUALCOMM

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Qualcomm Incorporated (nasdaq: QCOM) is both a semiconductor manufacturer and telecommunication equipment producer headquartered in San Diego, CA. It has over 200 other locations worldwide. Qualcomm was formed in 1985 by seven former employees of the technology company Linkabit, which later became L-3 Communications. The founders named the company QUALCOMM as an acronym for “QUALity COMMunications.” Qualcomm both designs and markets wireless telecommunications products and services. It began in 1985 as a research and development centre, but because of its heavy research and investments into CDMA technology, it rose to prominence only in the 1990s.

Chipmaking and Patents

While Qualcomm gets most of its revenue from its chipmaking business, much of its profits come from the licensing of its many patents. The parent company is Qualcomm Incorporated (Qualcomm), which has several wholly owned subsidiaries:

• Qualcomm CDMA Technologies (QCT) sells all of Qualcomm’s products and services (including chipsets).
• Qualcomm Technology Licensing (QTL) is responsible for the patent licensing business.
• Qualcomm Technologies, Inc. (QTI) operates nearly all of Qualcomm’s R&D activities.

Back in the early 1990s, Qualcomm was operating at a loss due to its heavy research and investment into the then-new CDMA technology. This prompted the company to launch an IPO in December 1991, which raised $68 million for the company. Thanks to a surge in the value of technology companies in the 1990s, Qualcomm was able to issue a secondary offering of stock in 1995 which raised $486 million. That second round of funding allowed Qualcomm to commence the mass manufacture of CDMA-based phones, equipment, and base stations. The motivation for doing so was the adoption of the CDMA standard by most U.S. cellular networks. Qualcomm had $383 million in revenue in 1995, which more than doubled to $814 million in 1996. By 2018, Qualcomm had revenue of $22.732 billion, but that was down from the 2014 revenues of $26.487 billion.

Qualcomm Snapdragon

Qualcomm’s Snapdragon is the company’s flagship system-on-a-chip product for mobile devices. It was designed and released in 2007; however, it has recently returned to the spotlight as the upcoming 5G wireless networks are expected to benefit strongly from the technology behind Snapdragon chipsets. A single Snapdragon chip can contain multiple CPU cores, a GPU, a wireless modem, a hexagon Digital signal processor, a Qualcomm Spectra Image Signal Processor, and a variety of other hardware and software that supports the smartphone, tablet, or laptop AI acceleration, gesture recognition, audio systems, video playback, camera, and GPS.

As of 2020, the Snapdragon chips are used in several systems including Android and Windows smartphones, and netbooks. You can also find the chips in wearable technologies and in auto systems. In addition to the Snapdragon chips, there are also Snapdragon mobile chargers, wi-fi chips, and modems. As of 2020, the devices using the Snapdragon chips include the “Always Connected PCs” marketed by Lenovo, HP, and Asus.

Qualcomm Price History

After the IPO in December 1991 at just $0.50 (split-adjusted), Qualcomm stocks continued to rise steadily for the next two years, hitting $2.71 in September and October of 1993. A pullback dropped the price to a low of $1 over the following 7 months. That was hardly the end for Qualcomm stocks though. The stock moved steadily higher off that bottom, reaching $3.52 a share in December 1998. And that was just the beginning of the dot-com boom. Over the next 12 months, the shares of Qualcomm skyrocketed, reaching as high as $100 in January 2000. However, it closed that month at $63.50 a share as the bubble began to pop.

The Dot-Com Boom Ends

Over the next 18 months, the Qualcomm stocks headed lower in choppy trade, finally bottoming in August 2002 at $11.61 a share, for a loss of nearly 90% from its January 2000 high. There was a rebound off those lows, and by April 2006 the Qualcomm stocks were back above $50 a share, a level that has turned into a strong support and resistance area for the stock.

The 21^st Century

Like most of the market, Qualcomm rallied following the financial crises, but by 2015 that rally ran out of steam. For the next four years the shares would trade in a broad range from a $50 floor to a $70 ceiling. As 2019 began so too did the Qualcomm stocks begin to pick up steam. A broader market rally, and strength in the chipmakers in general, helped lift the stock out of its range-bound trade. In November 2019 a high of $94.11 was recorded, but the rally fizzled out before the stock could get past the January 2000 all-time high of $100 a share. Overall, you can say Qualcomm investors have been treated well by the stock. An investment in 100 shares in 1991 would be 3,264 shares after all the splits and spin-offs over the years. That stake, which cost $1,600 in 1991, would have turned into $290,071.68 as of the market open on January 2, 2020. You also would have been receiving dividends since 2003, totalling another $6,266.88.

Qualcomm Trading Ideas

With shares sitting near an all-time high as of January 2020, buying Qualcomm stocks is a bold move. Especially if you consider that the stock has traded from a low of $49.10 to a high of $94.11 over the previous 52 weeks. As a technology stock in the often-volatile semiconductor space, Qualcomm stocks also tend to exhibit volatility. That aside, Qualcomm is perhaps in the best position to profit from the upcoming 5G network rollout in 2020. It is the top producer of the 5G modem chips that the handset producers need. And with all the complexities of transitioning to 5G, Qualcomm could enjoy some pricing power that will finally lift its stagnant revenues. And with 2020 being just the beginning of the 5G upgrade cycle, Qualcomm could see benefits for many years.

Qualcomm Technical Indicators

Like most stocks, technical indicators can be used to analyse Qualcomm stocks, and they have been quite useful in the past. Because Qualcomm tends to trend most of the time, a simple moving average strategy can prove successful. Try plotting a 20-day moving average, with Qualcomm stocks: a buy as price crosses above the 20-day MA line, and a sell as it crosses below that line. Momentum indicators have also been useful in analysing the stock and could be a good way to see buying pressure building once 5G rolls out.

Qualcomm Earnings

Qualcomm stocks have rallied in the past on strong earnings, and the coming year could see the earnings advancing more quickly than expected. On an annual basis, 2019 is the first year since 2014 that Qualcomm’s revenues have increased, and that could be the beginning of a trend as the 5G networks are getting ready and the handset companies have been ramping up purchases of Snapdragon chips. The earnings season might be a good time to buy Qualcomm in 2020.

In Conclusion

Qualcomm stock is impressive as one of the early technology pioneers that not only lasted through the dot-com boom and bust, but has thrived since then. The upcoming rollout of 5G networks could be a boon for Qualcomm and its stock since they are a leading manufacturer of 5G chips. If they benefit as much as expected, Qualcomm stocks could have a rally coming. One way to trade Qualcomm stocks is through the MetaTrader 5 platform available from AvaTrade. The new and improved interface gives the clients access to Qualcomm and to hundreds of other stocks as well. Plus, it is possible to trade commodities, indices, and cryptocurrencies through the MT5 platform.

Technical traders will appreciate the 38 available technical indicators built into the MT5. They will also appreciate the support for Expert Advisors, which makes automated trading of Qualcomm, or any other supported asset, possible with MetaTrader 5 through AvaTrade. What are you waiting for? Open your AvaTrade account for free today and start analysing Qualcomm stocks for your next potential trade.

AvaTrade Qualcomm Stock Trading Information

AvaTrade Qualcomm Stock Trading Information

• Qualcomm Stock Symbol: #QUALCOMM
• Trading Times: Monday – Friday 14:30 – 20:59 GMT
• Country: USA
• Currency: USD
• Exchange: NASDAQ
• Leverage:

Qualcomm stock FAQ

• Why should I trade Qualcomm shares?

  Qualcomm is a global wireless technology company and a major force in the rollout of 5G technology. Shares of Qualcomm remained in a fairly wide channel for roughly 2 decades before exploding upwards in 2020 as 5G technology was rolled out among the major wireless carriers. Trading these shares now can potentially expose traders to additional upside, or for those who find the stock overbought a contrary short sell strategy could be implemented. In either case this is one of the hot stocks and there should be plenty of trading opportunities.

   
• Is Qualcomm the best telecommunications stock for trading?

  Many of the telecommunications stocks have had a reaction to the 5G rollout, but none have seen the strength of gains that Qualcomm shares have seen. Right now it could very well be the best telecommunications stock for trading, but as we know the markets are always changing, so Qualcomm likely won’t always be the best telecommunications stock for traders. However, it should remain a good choice as long as traders are able to adapt and change their trading strategies in reaction to market changes as they occur.

   
• What’s the best strategy for trading Qualcomm shares?

  In late 2020 Qualcomm shares remain in a massive uptrend, so trading a momentum-based strategy is going to provide the best potential for as long as this uptrend remains in place. Because we know that at some time the uptrend will halt, smart traders should also prepare for a change in strategy that looks for shares to either turn sideways in consolidation, which would favour a channel following strategy, or fall in profit taking, which would recommend watching for a reversal pattern in the stock.