Qualcomm Eyes $22 Billion Growth | Bloomberg Technology

Qualcomm's Growth Strategy

• Qualcomm is pushing into new markets and expects to generate up to $22 billion in additional revenue by 2029, with $4 billion coming from the Internet of Things (1m52s).
• The company's total addressable market is now up to $900 million, and Qualcomm CEO detailed the company's vision for growth at an investor meeting (2m7s).
• Qualcomm's growth strategy involves diversifying the company beyond its core mobile market, which does not grow as much, and into areas like automotive and the Internet of Things (2m47s).
• The company expects to see multiple expansion as revenues from non-mobile become a bigger percentage of its total revenue (3m3s).

Qualcomm's Market Growth and Risks

• Qualcomm is growing in all markets and expects to continue to grow annually into its targets, bearing any cyclical risks in the market (3m22s).
• The company's CEO acknowledges the potential for downside risks, including cyclical corrections and capacity constraints in the semiconductor industry (3m49s).
• Qualcomm is excited about the automotive market, where people are buying cars due to their computational capabilities and digital features (4m12s).

Growth in Automotive and IoT

• The Internet of Things is a key area of growth for Qualcomm, with a range of revenue streams including virtual reality, mixed reality devices, industrial networking, and personal devices like wearables and watches (5m0s).
• The company's CEO is confident that the Internet of Things will reach its target of $14 billion in revenue, citing the diversity of its revenue streams and the growth of the ecosystem (4m46s).

Qualcomm's PC and Industrial Growth

• Qualcomm aims to achieve a $4 billion target in the PC service market by 2029, which is considered achievable given their leading platform that can run Microsoft Copilot Plus, with the overall PC service market expected to be $35 billion in 2029 (5m46s).
• The company has seen significant design traction since launching their platform in May, with 20 designs initially and now having 50 platforms across Dell, HP, Lenovo, and exceeding sales expectations (6m38s).
• The adoption of AI at the edge has changed the cost equation for companies, allowing Qualcomm to run multibillion-permit or models into devices at the edge, giving them confidence in achieving $4 billion in industrial revenue by 2029 (7m11s).
• An additional $2 billion in revenue is expected from augmented reality and the Meta-smart class, with the latter being a popular product (7m15s).

Qualcomm's Smartphone Business

• Qualcomm's bread-and-butter business has been smartphones and cells, with the premium tier Android market being a focus area, and the company seeing significant growth in this segment despite flat to single-digit growth in the overall market (7m51s).
• The premium tier is expected to drive growth, with people wanting better phones with more AI capabilities, leading to an AI-driven upgrade cycle (8m22s).
• Qualcomm's China business has expanded despite geopolitical tensions, with the company having a leading technology that cannot be replicated by domestic products, making them a significant player in the Chinese market (9m15s).
• The company is not concerned about tariffs, expecting China to continue buying their chips due to their leading technology and the right trade direction (9m49s).
• Qualcomm does not have any procurement issues or need to stockpile, being a significant exporter of chips into China (10m4s).

AI and Future Trends

• There is a large number of specialized models becoming available, and the trend is heading towards AI as a new computing paradigm, with models becoming regionalized to cater to unique aspects of different regions (10m31s).
• The future is expected to have models specialized for different things, with China, Durable, and others having their own models, and this transition is considered exciting and new (11m15s).

Qualcomm's M&A and Future Plans

• Qualcomm is always looking for opportunities, and their M&A framework has been important in accelerating their plans, as seen in their entry into the PC space (11m45s).
• Currently, there are no large acquisitions necessary for Qualcomm to execute on their $22 billion plan, and they are focused on executing on this plan over the next five years (12m2s).
• Qualcomm's plan is to tell investors that their strategies are working, and they do not need a new strategy, having executed on what they said they would do in new markets, with five consecutive quarters of record growth (12m51s).
• Qualcomm is well-positioned to continue growing and reach $22 billion in revenue by 2029, with a potential 50-50 split between mobile and non-mobile revenue by the end of the decade (13m45s).
• Analysts continue to have confidence in the CEO's ability to move Qualcomm forward, and the company is confident about their plan and will continue to execute (14m12s).

Semiconductor Industry Updates

• Semiconductor Manufacturing International shares have more than doubled over the last two months, despite risks tied to geopolitical tensions in China, and the stock is up 120% from September (14m29s).
• NVIDIA is set to report earnings, and there is potential for hiccups in the quarter, including a design issue for servers with Blackwell, but Michael Dell has stated that they are working around it (15m4s).
• Analysts are waiting for clarity on the supply side of Blackwell and demand for the Hopper, with expectations of low double-digit growth for the Hopper this fiscal year and no limiting demand in sight (15m57s).

NVIDIA's Earnings and Valuation

• Revenue is expected to double for the full year, with an 80% increase in the third quarter and a lesser increase in the fourth quarter (16m21s).
• Margins have peaked and are expected to stay above 73, but may not increase due to the costs of new products and the inability to charge more for them (16m39s).
• The valuation of NVIDIA is considered high, with a 200% run-up over the past year and a tripling of the previous year, raising concerns about its sustainability (17m20s).
• The problem with NVIDIA's valuation is that it has already had a triple and a double, making it seem like a quarter being tossed and coming up heads, with momentum investors potentially freaking out when it eventually comes up tails (18m3s).
• To gain confidence in NVIDIA, it would be necessary to hear from Jensen that the company can continue to thrive despite the scaling laws, and that the handful of companies willing to spend large amounts of money on AI will continue to do so (18m43s).
• The companies driving the AI market, including Apple, Meta, Microsoft, and possibly Amazon, have the cash flow to continue spending, but the market is narrow and demand is key (19m8s).
• Blackwell is a concern, as it is not yet shipping and may have overheating issues that need to be modified, and its impact on the market is uncertain (19m38s).
• The cautious investor approach is to look at NVIDIA's weaknesses and consider buying on weakness, given the company's long runway and safety due to its competitors not catching up (20m17s).
• However, the valuation is steep at this point, and it's essential to carefully evaluate the investment (20m33s).

Industry News: Global Foundries, Salesforce, MicroStrategy

• Global Foundries has been awarded $5 billion by the Biden Administration's CHIPS Act to support the expansion of its factories in the United States, which is expected to create thousands of production jobs (21m12s).
• Salesforce plans to cut workers from its recently acquired data management startup, with some roles not being required "post-harmonization" and an end date of January 31 for those employees (21m28s).
• Shares of MicroStrategy are rising after the company announced plans to increase the amount of convertible debt in an effort to buy more Bitcoin, catapulting the market value to over $10 billion (21m40s).

Market Updates: Nasdaq, Crypto

• The Nasdaq 100 is off more than a percentage point, with NVIDIA down 1.5%, ahead of its earnings report, which could see an 8% move in the stock, equivalent to a $300 billion change in market cap in one day (23m29s).
• Crypto is experiencing a risk-on sentiment, driving it up 1.5%, due to a feel-good factor around future policy in the United States and heavy buying for the balance sheet (23m57s).
• A group that tracks the results says 265 pro-crypto candidates were elected to the U.S. House and 20 in the Senate, which could influence the industry, including policy under President-elect Trump (24m27s).

Strike CEO's Perspective on Bitcoin

• Strike CEO Jack Mallers reports that his business doubled the day after the election, with 100% growth in Bitcoin purchases, and customers predominantly buying and holding Bitcoin in their own custody (24m57s).
• Mallers believes that the transition from DeFi to more traditional finance is pro-liquidity, enhancing the profile for Bitcoin, and that his company does not think of itself as a speculative exchange (26m11s).
• Bitcoin is considered a better asset for governments, corporations, or individuals, with a bullish outlook and a strategic reserve being a significant economic announcement in U.S. history, comparable to 1971 and Richard Nixon's actions (27m9s).

Bitcoin's Potential and US Policy

• The U.S. has made significant economic announcements in the past, such as taking gold in 1933, divorcing from the gold standard in 1971, and bailing out big banks in 2008, and the next announcement could be about being pro-technology and innovation, with Bitcoin being an asset that was accessible to the people 15 years ago (27m48s).
• Bitcoin has equal rights, an equal network, and acts in the best interest of the public, with governments only owning 2-3% of the asset, making it pro-industry and pro-growth (28m1s).
• The U.S. has a choice to make, and as a country, it can choose to be pro-growth, pro-business, and pro-Bitcoin, with the worst thing being not knowing enough, and de-risking by buying some and pushing American ideals in technology and innovation (29m20s).

Venture Firms and Secondary Markets

• The stigma around venture firms selling shares in a portfolio company before an IPO is going away, and it is no longer seen as a negative sign, but rather as a sign of needing liquidity for LPs (30m25s).
• The secondary market is becoming more formalized, with different types of transactions, including tender offers sanctioned by companies, which are large transactions where employees may also sell shares (31m9s).
• Strike CEO Jack Mallers believes that buying Bitcoin is the best thing to do, and it will be true for the next 1500 years, and as a country, the U.S. has to make a decision to support this industry, with companies like Coinbase, Strike, and Tether selling the U.S. dollar (29m7s).

Crypto Market Cap and Bitcoin Investment

• The market cap of the entire crypto ecosystem is less than that of Nvidia, and it is expected to change, with ego getting in the way of people investing in Bitcoin, and people thinking they are late to the game (28m48s).
• Private trades can delay initial public offerings (IPOs) as they provide liquidity to employees and insiders, reducing the pressure to go public (31m58s).

SpaceX Starship Launch and Future of Space Exploration

• SpaceX has successfully launched its Starship rocket, marking another milestone in the company's progress, with one investor noting that SpaceX is building the "railway" and creating new opportunities (32m28s).
• Former NASA Deputy Administrator comments on SpaceX's recent test launch, calling it a mix but ultimately a success, with the company making good calls and pushing technology forward (33m5s).
• The test launch showed the Starship vehicle succeeding beyond expectations, with the second stage landing in a controlled way, and the company making progress towards a fully reusable vehicle (33m46s).
• The key to trips to Mars with this kind of vehicle is increasing the launch cadence and achieving in-orbit fuel transfers, which could happen within the next four years (34m35s).
• With the increased launch cadence, SpaceX could reach 400 launches in four years, and missions to Mars could become possible in four or five years, although it's unlikely that people would be on board initially (34m49s).
• The relationship between SpaceX and the next administration could be beneficial, with President-elect Trump and Elon Musk discussing Mars trips, and the possibility of other companies thriving in this new era (35m38s).
• The Obama transition team set the course for a more competitive arrangement in space exploration, which could lead to more companies succeeding in the industry (36m4s).
• Space-X has dominated the market in transportation to and from low-earth orbit, having run through the opening given to them, and it's hard to guess how much farther ahead they would be than everyone else, with no other company able to get contracts through the military side (36m14s).
• The goal is to put in policies that will allow for more competition, as the goal is never a monopoly, and it was more expensive to the government when there was a monopoly (36m46s).
• United Launch Alliance is still launching, but it is more expensive and not reusable, while Blue Origin has launched their Vulcan rocket and plans to launch New Glenn in 2025, which is supposed to be reusable over the longer-term (37m23s).
• The Europeans are developing new vehicles, mostly not reusable, and there is no question Space-X is in the lead, with it being hard for anyone to catch up in 10 years unless Space-X and Elon Musk trip (37m49s).

Comcast Cable TV Spinoff

• Comcast plans a cable TV spinoff, with the company confirming the spinoff of cable TV channels, and they will keep NBC, which is their broadcast network, including their biggest sports rights and hard news-gathering business (39m8s).
• Comcast will also keep Bravo because its programming does quite well on Peacock, and all the cable networks that do not fit into their streaming business and have been a drag on that stop are getting spun out into something completely separate (39m49s).
• The spinoff company will have $7 billion in revenue, and it will depend on the new leadership whether it grows or shrinks, with the possibility of it being a vehicle for acquisition or being bought by a private equity firm (40m23s).

Hasbro's Shift to Digital Play

• Hasbro wants to shift its focus back to play, moving away from film and TV and focusing on digital versions of popular plant cash, such as G.I. Joe and Mr. Potato Head (41m10s).
• Hasbro's popular brands, such as G.I. Joe, are being transitioned into video games, as kids who grew up with these brands now want to play video game versions of them on console and PC (41m43s).
• Chris Cox, the relatively new CEO of Hasbro, is a gamer at heart and has played Magic: The Gathering, a collectible card game that is several decades old and a huge driver of sales for the Wizards of the Coast division of Hasbro (42m16s).
• Magic: The Gathering is a game that is complicated to get good at, but younger people can enjoy it, and Hasbro is launching cards with Marvel and Lord of the Rings themes to bring in new players (42m59s).
• Hasbro is incorporating IP from other companies into Magic: The Gathering cards, such as Spider-Man or Wolverine images, and is partnering with other companies across IP, businesses, and platforms (43m12s).
• The future of Magic: The Gathering looks promising, with a mix of older players who want to continue playing with their friends and communities, and newer players who are being brought in through partnerships and new themes (43m1s).

NVIDIA's Earnings and Market Impact

• After the discussion on Hasbro, the focus shifts to NVIDIA's upcoming earnings report, which is an important macro event for the entire market, with up to $300 billion of market capitalization expected to move (43m46s).
• The market is currently off its lows, with NVIDIA trading at $145.93, and there is potential for a future where supply-side matching up with demand (43m53s).