I have been bullish on Qualcomm (QCOM, Financial) for several months now and the stock has delivered stellar returns in the reference time period. Qualcomm’s turnaround is gaining pace and I think the stock can continue moving higher on the back of successful management and implementation.
Achieving Success in IoT Segment
As per report from IDC, the IoT market is predicted to reach $7.1 trillion by 2020, with billions of previously unconnected areas being connected to the internet. Qualcomm has already grasped a robust position in the smartphone modem market, but the company is now focusing on outlets for additional growth.
However, the company does not break out of its Internet of Things revenue precisely, but its QCT division generated $1.7 billion from opportunities such as mobile compute, automotive, networking and IoT in the previous year. A question that might arise in stockholders mind is  how the company’s IoT business is surging at the present stage, with all of these types enduring together.
As a matter of fact, the company’s IoT opportunities do not just arrive from its modem sales. Qualcomm also created a robust IoT patent group, just like in the case of mobile, to gain competitive advantages.
At present, the company clasps 724 IoT patents, followed by Intel at second position with around 688 IoT patents. In the case of Qualcomm, 157 patents are the most valuable, as per research by LexInnova. The company holds the Ă‚ majority of these valuable IoT patents, but Intel trails in fifth with just 40.
A New 821 Upgrade
Qualcomm launched its Snapdragon 810 processor in 2014. Snapdragon 810 turned into a huge failure for the company, mainly due to overheating and underperformance issues. Because of this, the company lost its position in Samsung’s flagship mobiles.
Later, all of these problems were solved by introducing a new and advanced Snapdragon 820 processor, which was also used by Samsung for its latest flagship phones, Galaxy S7 and S7 Edge.
The company has now decided to upgrade to 821. With this upgrade, it can make sure that its high-end chips come across the needs of high-end software and new VR apps in Samsung's Gear VR and Alphabet’s approaching Daydream devices. Upcoming variants might also be used for drones as well as connected cars. Qualcomm has many huge opportunities in front of it and given its past record of successful execution, I expect the company to capitalize on them.
Conclusion
Catching a falling knife can be a risky investment, but in case of Qualcomm, the downside is limited. The stock has shot up almost 40% since I recommended buying it and the uptrend will likely continue going forward.
Disclosure: I don't hold a position in any of the stocks mentioned in the article.
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