2 Ways to Trade Qualcomm Ahead of November’s Earnings

Key Points

• Qualcomm has held onto its 40% rally, recovering well from early-October weakness.
• However, shares remain stuck below key resistance heading into next month’s earnings report. 
• There are two clean options for investors on the sidelines: be brave and buy now for maximum upside, or wait for confirmation before jumping in.

Shares of Qualcomm Inc NASDAQ: QCOM closed out Monday’s session just above $167, extending a steady recovery that’s put it back near the upper end of its recent range. The stock is still up about 40% since April, even after a brief 9% pullback earlier this month, and remains one of the more resilient names in the semiconductor space. Much of that resilience has come amid a choppy backdrop for the sector, with capital flowing back and forth between AI winners like NVIDIA NASDAQ: NVDA and laggards trying to prove their relevance.

This resilience hasn’t come easy. While many of its bigger chipmaking peers have soared to new highs this year, Qualcomm continues to trade around the same levels it did in 2021. This is a reminder that, despite the progress seen in its diversification and AI-driven products, the market has yet to fully reward the company’s execution.

With earnings due in the first week of November, investors face a familiar dilemma: does Qualcomm finally have the momentum to break out, or is this rally running on borrowed time? Here’s how to think about the setup and two ways to think about trading it.

The Setup: Strong, But Unproven

Technically, Qualcomm is still holding its uptrend from the spring. Bulls have consistently stepped in to buy dips, and the ongoing rebound from the market-wide dip earlier this month has reinforced support around $155. The RSI did not reset from overbought territory in September, but it is also trending up from near-oversold levels earlier this month. 

It currently has a healthily bullish reading of 55, suggesting that the bulls are in control and the stock has a lot of room to run.

It’s been stuck below a critical resistance zone near $180 for over a year. A decisive break above that level would mark Qualcomm’s first major breakout in a long time, but the company has struggled to sustain momentum each time it’s approached it.

Fundamentally, there’s plenty to like. Beyond smartphones, Qualcomm’s leadership team has made real progress diversifying into areas like connected vehicles, industrial IoT, and low-power edge computing.

These segments are growing faster than its legacy handset business and are key to reducing cyclicality in future earnings. It’s that diversification story that could ultimately reshape how investors value the stock.

Qualcomm’s valuation also remains compelling, with a price-to-earnings (P/E) ratio of about 16, a fraction of what peers like NVIDIA command. The company also boasts a consistent track record of beating Wall Street expectations, having topped both earnings and revenue estimates in every quarter for at least the past two years.

Still, sentiment remains fragile. Investors haven’t forgotten the stock’s long stretches of underperformance, even as it has made a solid shift in recent months. 

Option 1: Buy Now and Bet on Another Beat

The bullish approach ahead of next month’s earnings is straightforward—lean into Qualcomm’s proven ability to beat expectations and start building a position now. The company has spent the past year expanding into automotive and IoT markets, with higher margins and less intense competition. Its recent acquisition of Arduino also strengthens its position in robotics and embedded hardware, which should add additional growth drivers.

If Qualcomm once again posts better-than-expected results and guides confidently on future growth, a push through $180 could come quickly. The broader market environment remains risk-on, with tech stocks leading into Q4, and that tailwind adds to the upside argument.

Option 2: Wait for Confirmation

The more cautious approach acknowledges that Qualcomm’s 40% rally since April might already have priced in a lot of optimism. Even with its attractive valuation, this stock has struggled to sustain breakouts and win over investors for the long term.

Waiting for confirmation, in the form of strong earnings and a clean move above $180, allows traders to avoid the volatility that often follows results. If Qualcomm disappoints, or even just meets expectations without offering bullish enough guidance, shares could easily retreat toward the $160 level.

Analysts have repeatedly praised Qualcomm’s execution, but there’s a growing sense that the company must prove it can translate innovation into sustained revenue growth. For those burned by its lack of follow-through, patience may be be the smarter choice.