Qualcomm: License Dispute Will Pass
- Qualcomm's stock got hit due to a license dispute with Arm Holdings.
- The dispute centers on Qualcomm's acquisition of Nuvia and differing royalty rates, with Qualcomm potentially facing higher fees under a new agreement.
- The financial impact is likely limited; Qualcomm can absorb higher royalty rates and pass costs to customers, maintaining strong earnings and margins.
- The stock trades at just 15x FY25 EPS estimates with AI PC and automotive opportunities outweighing the license dispute risks.
QUALCOMM Incorporated (NASDAQ:QCOM) slumped following news of an ongoing license dispute with Arm Holdings plc (ARM). Considering the impacts on both companies, the dispute is likely to be resolved making the biggest issue whether Qualcomm will have to pay a higher royalty rate. My investment thesis remains Bullish on the stock with a huge AI opportunity ahead and a cheap valuation for a chip stock.
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