If you’ve followed Qualcomm for any stretch of time, you probably think of them as the go-to name for smartphone chips. Today, something bigger might be brewing and Qualcomm’s latest earnings drop gave us a closer look. Beyond stabilizing phone demand, the company has been leaning hard into AI. That push is starting to matter in a way that goes way past incremental upgrades.
Qualcomm’s quarterly results, announced at the end of April, were solid, even though the stock traded lower in response. Qualcomm beat estimates and showed signs of life in mobile, thanks mostly to China’s recovering demand. The more important development, however, was their push into on-device AI. Qualcomm’s new Snapdragon X chips, for instance, are basically tailor-made for a future where people expect their devices to be smart, responsive, and secure without sending every request up to the cloud.
Pushing AI down to the device, what the industry calls “edge AI”, means faster responses, tighter privacy and less strain on data centers. That’s good news for consumers who may want voice assistants that don’t struggle with a bad connection or cameras that recognize what they see instantly. Qualcomm is betting those features will shift from “nice to have” to “must have” a lot sooner than people think. Judging by how quickly PC makers, such as Dell and Lenovo are jumping on board with Qualcomm’s laptop chips, they might have something.
There’s also the auto angle. The Snapdragon Digital Chassis platform is getting traction with carmakers, who see software as the next big selling point. As vehicles become more computer-driven, Qualcomm’s AI-centric chips could become just as essential to a car as they are to a phone. It’s a huge market and one Qualcomm’s well-positioned to benefit from, especially as legacy automakers scramble to keep up with Tesla's innovation.
Of course, there are potential challenges. Qualcomm has been in the crosshairs of regulators investigating its licensing model and rivals, including NVIDIA and AMD, trying to get into the same space. Even though smartphone sales are mixed, it’s a mature business. It's unlikely to grow the way it did a decade ago. That’s why Qualcomm probably has to be successful with this pivot.
If they can pull it off, they’d have a foot in three big markets - smartphones, PCs, and cars - that are all demanding smarter and more capable chips.
We feel that Qualcomm still has plenty to prove, but they’re making progress. They’re developing and adapting, which is increasingly necessary in the tech space. Qualcomm’s next chapter could be looking more interesting.
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Multiple funds have a limited operating history of less than a year and risks associated with a new fund.
The Leveraged and Daily Inverse Funds are not suitable for all investors. The investment program of the funds is speculative, entails substantial risks and include asset classes and investment techniques not employed by most ETFs and mutual funds. Investments in the ETFs are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund is designed to be utilized only by knowledgeable investors who understand the potential consequences of seeking daily leveraged (2X) or daily inverse (-1X and -2X) investment results, understand the risks associated with the use of leverage and are willing to monitor their portfolios frequently. For periods longer than a single day, the Fund will lose money if the Underlying Stock’s performance is flat, and it is possible that the Fund will lose money even if the Underlying Stock’s performance increases over a period longer than a single day. An investor could lose the full principal value of his/her investment within a single day. The funds do not directly invest in the underlying stock.
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For the Leveraged Long Funds because of daily rebalancing and the compounding of each day’s return over time, the return of the Fund for periods longer than a single day will be the result of each day’s returns compounded over the period, which will very likely differ from 200% of the return of the Underlying Stock over the same period. The Fund will lose money if the Underlying Stock’s performance is flat over time, and as a result of daily rebalancing, the Underlying Stock volatility and the effects of compounding, it is even possible that the Fund will lose money over time while the Underlying Stock’s performance increases over a period longer than a single day.
For the Daily Inverse Funds because of daily rebalancing and the compounding of each day’s return over time, the return of the Fund for periods longer than a single day will be the result of each day’s returns compounded over the period, which will very likely differ from -100% and 200% of the return of the Underlying Stock over the same period. The Fund will lose money if the Underlying Stock’s performance is flat over time, and as a result of daily rebalancing, the Underlying Stock volatility and the effects of compounding, it is even possible that the Fund will lose money over time while the Underlying Stock’s performance decreases over a period longer than a single day.
Shares are bought and sold at market price (not NAV) and are not individually redeemed from the ETF. There can be no guarantee that an active trading market for ETF shares will develop or be maintained, or that their listing will continue or remain unchanged. Buying or selling ETF shares on an exchange may require the payment of brokerage commissions and frequent trading may incur brokerage costs that detract significantly from investment returns.
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A liquid secondary market may not exist for the types of commodity-linked derivative instruments the Fund buys, which may make it difficult for the Fund to sell them at an acceptable price. The Fund is new with no operating history. As a result, there can be no assurance that the Fund will grow to or maintain an economically viable size, in which case it could ultimately liquidate.
Derivatives may be more sensitive to changes in market conditions and may amplify risks and losses.
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