Qualcomm: Edge AI

QUALCOMM Incorporated engages in the development and commercialization of foundational technologies for the wireless industry worldwide. The company operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI). The QCT segment develops and supplies integrated circuits and system software based on 3G/4G/5G and other technologies for use in wireless voice and data communications, networking, application processing, multimedia, and global positioning system products. The QTL segment grants licenses or provides rights to use portions of its intellectual property portfolio, which include various patent rights useful in the manufacture and sale of wireless products comprising products implementing CDMA2000, WCDMA,LTE and/or OFDMA-based 5G standards and their derivatives. The QSI segment invests in early-stage companies in various industries, including 5G, artificial intelligence, automotive, consumer, enterprise, cloud, and IoT, and investment for supporting the design and introduction of new products and services for voice and data communications, new industries, and applications. It also provides development, and other services and related products to the United States government agencies and their contractors. QUALCOMM Incorporated was incorpotared in 1985 and is headquartered in San Diego, California.

Executive Summary

Qualcomm (QCOM) owns the mobile phone. If "Edge AI" (running AI on your device instead of the cloud) becomes real, Qualcomm is the winner. The cloud is too expensive and too slow for an AI assistant that watches everything you do. That processing must happen on the NPU (Neural Processing Unit) inside the Snapdragon chip.

1. The AI PC

Qualcomm is finally breaking the Intel/AMD duopoly in laptops.

Snapdragon X Elite: This chip runs Windows but with the battery life of a MacBook (Arm architecture). Microsoft is pushing "Copilot+ PCs" exclusively on NPU-enabled chips like Qualcomm's.

2. Automotive

Cars are becoming computers on wheels.

Digital Chassis: Qualcomm provides the "Snapdragon Digital Chassis" for infotainment and basic ADAS (driver assist). The backlog is $30B+.

Risks to the Thesis

Apple: Apple hates paying Qualcomm royalties. They are trying to build their own 5G modem to fire Qualcomm. It hasn't worked yet, but the threat is eternal.
China: A huge portion of revenue comes from Chinese handset makers (Xiaomi, Oppo, Vivo). Geopolitical sanctions could kill this business overnight.

Conclusion

Qualcomm is cheap (low P/E) because the market thinks "Smartphones are dead." We believe "AI Smartphones" will drive a massive upgrade cycle.

Qualcomm: Edge AI

Executive Summary

1. The AI PC

2. Automotive

Risks to the Thesis

Conclusion

QCOM Valuation Model

QUALCOMM Incorporated (QCOM)

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