Multiple Positives Emerge. Can QUALCOMM, Inc. Stock Climb Higher Further?

QUALCOMM, Inc. (NASDAQ:QCOM) stock is up 25% in November. Can QCOM stock rise further as multiple positives emerge?

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The recent takeover bid by Broadcom (NASDAQ:AVGO) has simply changed smartphone chip giant QUALCOMM, Inc. (NASDAQ:QCOM) shares’ fortunes after struggling for the majority of the year since the January sell-off. Though Qualcomm board has rejected the $70 per share acquisition offer, this news has lead to a strong rally in QCOM stock since October end gaining more than 30%. Now, there has been some positive news coming in over the weekend which could further boost the spirit of Qualcomm investors. Is there more upside left in QCOM stock in the near-term? Let’s take a closer look.

Finally, some positive development related to NXP acquisition.

A recent Reuter’s report suggests that the San Diego, California based chipmaker is all set to win a conditional Japanese antitrust go-ahead for its multi-billion dollar NXP Semiconductor (NASDAQ:NXPI) deal. Earlier, Bloomberg reported that Qualcomm may win European Union approval for its NXP acquisition by the year-end with slight modifications to the concessions. The smartphone chip giant reportedly seems to have struck a deal with the European regulatory body by agreeing to drop certain standard essential and system-level patents belonging to NXP in the proposed takeover. EU anti-trust body has now set the new deadline for deciding on Qualcomm’s acquisition of NXP as March 5, 2018. If Bloomberg reports turn out to be true, this could be shot in the arm for Qualcomm which at the moment is trying to fend off the takeover from Broadcom. If EU approval goes through then other remaining regulatory bodies will soon fall in line.

The NXP deal has been very crucial to Qualcomm’s growth story, a negative development on this front will be seen as a big setback. Qualcomm’s chip business has been doing well of late bucking the trend of saturating smartphone market as its QCT segment revenue rose 13% during the latest quarter to $4.6 billion. Special mention for the non-mobile businesses, Qualcomm’s revenue from other markets like automotive and Internet of Things (IoT) jumped 25% YoY in the recently concluded quarter. The NXP deal should further bolster the chipmaker’s growth in these fields which are expected to explode in the coming years. The above reports could also help Qualcomm to get an upper hand to conclude the deal smoothly as the tendered shares percentage keeps taking a hit.

Qualcomm’s diversification efforts get a boost.

Anand Chandrasekher, senior vice president and general manager of Qualcomm Datacenter Technologies recently confirmed that the company is finally shipping its datacenter offering Qualcomm Centriq 2400 series for revenue. The datacenter space for a few years now has been almost a monopoly for Intel (NASDAQ:INTC) with the likes of AMD (NASDAQ:AMD) and smaller ARM manufacturers failing to mount a tough challenge. However, now, the early benchmarks of Qualcomm’s datacenter offering Centriq server CPUs suggest that they could offer some potent competition for the Chipzilla. Though Intel’s chips have the overall edge, the Centriq CPUs trounce the latter in cases such as multi-threading workloads while not lagging by much in other scenarios. An ExtremeTech post covering the benchmarks of Centriq CPUs does suggest it is time Intel should be worried about competition in the datatcenter space as Qualcomm is not a lightweight company compare to the competition from AMD and other smaller players. Going by the initial benchmarks and few other factors, the author opines that smartphone chip giant can give Intel run for its money.

Bottomline.

Qualcomm stock has been almost flat over the last 5 days. The QCOM stock technical chart suggests that the technical set up has turned much bullish of late. As we had highlighted in our earlier coverage, Qualcomm stock saw a bullish long-term ‘golden cross’ last week after more than 18 months. The latest positive should come as welcome news for the stock. However, given the recent run-up in QCOM stock, the upside from here could be limited until some major development on the Broadcom takeover bid. Further, the stock is still overbought as per popular technical indicator Relative Strength Index (RSI) since RSI reading presently stands at 76.26, still above the commonly used overbought threshold of 70. Though the Bollinger Bands indicator doesn’t flash an overbought signal. QCOM stock as of now is a hold at these levels. Investors would be better off to make use of any pullback to go long on Qualcomm stock.

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