When we think about major players in mobile tech, Qualcomm (QCOM) always comes to mind. Their chips are the backbone of many gadgets, from Apple (AAPL) devices to ZTE (ZTCOY). On top of that, they continue to rake in massive sums by licensing their technologies.
With such a significant role in our mobile lives and a reputation for innovation, it might seem like investing in Qualcomm would have been a smart choice over the years.
But surprisingly, it’s been anything but great.
In the big picture, QCOM has mostly been a money pit for investors, especially when we talk about the last two decades that could have brought other opportunities.
Qualcomm started its journey back in the 1980s but gained massive traction when the mobile market surged in the 1990s. Their CDMA tech quickly became a global standard, with almost every device maker licensing it.
Following that success, Qualcomm shifted gears to make semiconductors for mobile gadgets. Their Snapdragon chips, which packed CPUs, GPUs, modems, and much more into one compact piece, became the favorite for Android smartphones.
Fast forward to today, Qualcomm is adapting its Snapdragon platforms for AI advancements, high-end Android smartphones, and personal computers, even aiming to compete with Apple’s more recent chip releases.
Despite optimistic predictions from analysts regarding Qualcomm’s future, its past performance leaves a lot to be desired.
After the dot-com bubble, many investors felt a valuation “hangover,” and things got even worse with various legal issues and bruised partnerships. In the 2010s, Qualcomm faced numerous antitrust lawsuits both in the U.S. and internationally, and the less-than-peaceful relationship with Apple stirred more challenges.
To compound the situation, efforts to acquire NXP Semiconductors (NXPI) fell flat due to regulatory issues. A bid from Broadcom (AVGO) to take over Qualcomm was also quickly shut down.
Dig into Qualcomm’s revenue, and you’ll notice fluctuations, sometimes growth of 30% in a year, only to drop 7% the next. Such ups and downs didn’t do any favors for investors looking for stable returns.
The Takeaway on Qualcomm Stock
Throughout its timeline as a public entity, QCOM has managed to almost double the performance of the overall market, offering an annualized total return (taking into account price movement and dividends) of 19.9% compared to 10.8% for the S&P 500.
However, that’s just about the only instance in which Qualcomm looks good. In practically every other context, the tech stock is trailing the broader market. (In the last decade, however, QCOM did outpace the S&P 500 by roughly 1.6 percentage points.)
If you’re curious about how this underperformance translates on an investment statement, consider this: $1,000 invested in Qualcomm 20 years ago would now be roughly worth $5,600, which breaks down to an annualized return of 9%.
Contrast that with the S&P 500, where the same investment would have grown to $7,900 today, giving an annualized return of 10.9%.
Now the big question is, can QCOM finally turn things around for long-suffering investors?
Currently, among 36 analysts reviewing the semiconductor stock according to S&P Global Market Intelligence, there are 11 Strong Buy recommendations, five with a Buy rating, while 19 suggest holding, and only one considers it a Strong Sell. This gives an overall call of Buy, albeit not with overwhelming enthusiasm.
Analyst Jim Kelleher from Argus Research expresses some positivity, saying Qualcomm is adapting well despite the changing landscape of their Apple business, eyeing multiple new chances for growth.
He states, “Snapdragon chips fit perfectly in an age where Gen AI is increasingly relevant. Qualcomm is seeing rapid expansions in sectors like automotive, networking, and IoT—all while bringing in a robust revenue stream from licensing. Because of this, QCOM seems undervalued for significant long-term prospects.”
Other Stocks Worth Noting Over the Last 20 Years
- If You Had Invested $1,000 in Netflix Stock 20 Years Ago, See Your Returns
- If You Had Invested $1,000 in Microsoft Stock 20 Years Ago, Here’s What You’d Have
- If You Had Invested $1,000 in Apple Stock 20 Years Ago, Check Your Earnings
