If Qualcomm Holds $145, Its Next Move Could Be Massive

Key Points

• Qualcomm’s recent sell-off has created a short-term setup that’s almost too good to ignore.
• Analyst support remains strong, with targets pointing to 50% upside.
• A modest valuation makes this a rare discount in the semiconductor sector.

Tech giant Qualcomm Inc. NASDAQ: QCOM has once again been testing the patience of even its most loyal investors. Despite consistently beating earnings expectations, operating in one of the market's hottest sectors, and trading against the backdrop of record-high equity indices, the stock still can’t break free.

It’s now down 3% for the year, while the S&P 500 has gained more than 8% and market-leader NVIDIA Corp. NASDAQ: NVDA is up a blistering 35%. 

The latest 10% drop to close out July broke the steady uptrend in place since spring, raising questions for long-term holders about the stock’s next move. Yet for those on the sidelines, the recent weakness could be setting up an attractive entry point.

It does not necessarily demand a multi-year holding period but is undoubtedly a short-to-medium term trade worth considering.

Reasons to Remain Optimistic on QCOM

The first thing worth noting is that Qualcomm’s underlying performance remains solid beneath the frustrating price action. Management has moved past concerns about losing business from Apple Inc. NASDAQ: AAPL, which is shifting more production in-house. The company continues to demonstrate resilience in core markets like mobile and automotive. The semiconductor sector itself is still firing on all cylinders. 

Consider the iShares Semiconductor ETF NASDAQ: SOXX, in which Qualcomm is the fifth-largest holding. It’s up more than 50% since April, underscoring Wall Street’s belief in the growth potential of semiconductors. Against that backdrop, Qualcomm’s underperformance looks more and more like an anomaly than a warning sign.

Appealing Valuation and Analyst Support

Then there’s the valuation. With a price-to-earnings (P/E) ratio of just 14, Qualcomm trades at a steep discount to both the broader market and sector peers, many of whom have P/E ratios in the triple digits. In an increasingly frothy market, this offers a rare opportunity to buy a proven business at a bargain multiple.

A wall of recent analyst support strengthens the bullish case. Piper Sandler, Mizuho, Rosenblatt, and JPMorgan have all reiterated Buy or equivalent ratings within the past two weeks, with price targets running as high as $225.

Qualcomm closed out Monday’s session below $150, which implies some very tempting upside potential in the region of 50%. 

The Technical Setup for QCOM

Then there’s the technical setup, wherein lies this short-term opportunity. Despite sliding sharply since late July and staying down, Qualcomm shares have been unable to set a new low since last Wednesday. That suggests selling pressure is starting to fade, and the bears could soon be under pressure. 

It’s worth noting that Qualcomm’s struggles aren’t being driven by a deterioration in its business, which makes this the kind of setup where short-term traders can find outsized gains.

If the stock can remain above the $145 level through the rest of this week and then reclaim $150, it should spark a reversal that sends it back toward the $160 mark and beyond.

The Reality Check

Of course, there are reasons Qualcomm is seen as one of the more frustrating tech stocks to own. Its tendency to lag in strong markets has tested investors’ patience for years, and the latest breakdown of its uptrend is another example.

Momentum traders will want a clean break back above $150 before committing, while longer-term investors may wait for proof that operational wins can translate into sustained stock performance.

Still, the risk-reward is compelling. A 14 P/E, strong analyst backing, and exposure to a sector leading the market higher all year make Qualcomm a diamond in the rough. The next move could be sharply higher if the bears fail to push it to new lows in the coming sessions.