Analysis: QCOM AAPL

When we started the Action Alerts PLUS portfolio's position in Qualcomm (QCOM) , we discussed the overhang the shares faced -- the upcoming end of Qualcomm providing chips for the iPhone given Apple's  (AAPL)  internal work as part of its Apple Silicon program. That Apple effort was expected to begin next year but this morning the two companies announced Qualcomm will provide its Snapdragon 5G Modem‑RF Systems for Apple's smartphones launching from 2024 to 2026.

What's key is this: Qualcomm acknowledges the deal isn't factored into its guidance for this year and it "may" have to change guidance when it reports next. To be clear, we do not think this will have a material impact on Qualcomm's calendar 2023. While some will say this new agreement just kicks the can down a long road, it also means we are going to see revenue and EPS expectations for Qualcomm raised for 2024-2026, and likely providing a lift to price targets as well.

We are boosting our own price target to $150 from $135, and us add further to our QCOM position this morning. As we see it, the renewed business with Apple gives Qualcomm that much more runway to ramp up its automotive and IoT businesses.

After you receive this Alert, we will buy 210 shares of QCOM at or near $112. Following the trade, QCOM shares will account for roughly 3.1% of the portfolio.

(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)