We're Upping Targets for Qualcomm, Universal Display
After TSM’s June revenue report, Samsung’s Unpacked Event, and Apple’s iPhone 16 expectations, we see strength on ... display
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Following news of several technology names including Apple AAPL and Samsung, we are:
Lifting our Qualcomm QCOM price target to $255 from $240 and keeping our panic point at $175 for now.
Increasing our Universal Display OLED price target to $250 from $225, and resetting our panic point at $180, up from $170 and compared to our $165.84 cost basis for the position.
Why the jump in target prices? First let's discuss recent news in these two portfolio holdings and then explain our reasoning.
Yesterday was an eventful day for Qualcomm and Universal Display. It began with Taiwan Semiconductor’s (TSM) June revenue report that revealed its June-ending quarter revenue rose 40% year over year. Because TSM’s second largest market behind high-performance computing is smartphones, we should see a nice sequential improvement in that end market segment when TSM reports on July 18.
Samsung also held its Samsung Unpacked! 2024 event, and while headlines favored the debut of its wearable smart ring, the Galaxy Ring, we were far more interested in the news about its all-new foldable product lineup. The company revealed the Galaxy Z Flip 6 and the Galaxy Z Fold 6, and reviews are favorable. The key for us is threefold – these devices will spur incremental adoption of foldable products and we will see a competitive response from other smartphone vendors that will also help market adoption. That in turn will help lift overall smartphone demand, good for Qualcomm and Universal Display, but also drive demand for larger organic light emitting diode displays, another positive for Universal Display. We suspected this would be the case, and the event confirmed it.
During the event, Samsung also discussed how it was bringing its AI, dubbed Galaxy AI, to its wearable products, including the new ring and watches, as well as new smartphone models. Then late yesterday, Bloomberg and others reported Apple plans to ship at least 90 million iPhone 16s in the second half of 2024, 11% more units than the number of iPhone 15 models shipped in the second half of 2023. The reason behind the reported increase is tied to the rebound in the smartphone market, but also Apple Intelligence. Odds are some will react quickly to this news, but we continue to think Apple will need to show more use cases for Apple Intelligence to spur adoption. In this area, we would not bet against Apple and its marketing team.
Following TSM’s June revenue report, we boosted our price target on AAPL shares as well as those for Nvidia NVDA.
