Qualcomm's diversification strategy is gaining traction, as evidenced by their recent investor day where they doubled their fiscal 2029 non-handset revenue goal to $40 billion and lifted their automotive revenue target to $10 billion. They also secured a deal with Meta to supply data center CPUs for AI infrastructure, with production of their Dragonfly C1000 slated for 2028. Despite facing challenges from customer concentration in Apple, Qualcomm's strategic moves position it well for future growth in the AI sector, making it a compelling investment opportunity.

Qualcomm's position in the AI supply chain has come under scrutiny, leading to skepticism from investors. Despite the company outlining a medium-term plan to capture market share in custom chips, AI accelerators, and CPUs, the market remains doubtful due to Qualcomm's minimal share in these areas currently. This skepticism has negatively impacted its performance, making it a detractor for the portfolio this quarter.

QUALCOMM INC has been a significant contributor to our portfolio, reflecting its strong fundamentals and growth potential. We believe that the company's focus on innovation in the semiconductor space positions it well for future success. The recent increase in our position from 1.2% to 1.7% indicates our confidence in its ability to generate stable free cash flows and maintain a competitive edge in the market. As we continue to seek undervalued opportunities, QUALCOMM INC remains a key holding due to its robust financial metrics and growth prospects.

Qualcomm (QCOM) is a 'value tech' company which has enviable cash flows but we believe has been consistently underappreciated in the market for its technology licensing business, which has frequently been targeted for legal action by some of its major customers. However, we believe it continues to prove its best-in-class technology and, despite companies attempting to circumvent Qualcomm, we continue to see a long-term position in the wireless technology space for the company.