Qualcomm has put up some eye-popping growth numbers under CEO Cristiano Amon while also expanding into hot areas such as in-car technology.
However, shares of the tech giant are trading on a forward price-to-earnings multiple of about 10.7 times — more comparable to a stodgy value stock than a fast-growing tech company like Qualcomm.
Amon says investors should rethink how they are viewing Qualcomm, and do it quickly.
"I think it's really a mistake for the market to continue to look at Qualcomm and say this is a communications company for the mobile market." Amon told Yahoo Finance on the sidelines of the World Economic Forum (video above). "Then they look at valuations in the mobile market and say that's a problem. It's an absolute mistake. That is not the Qualcomm of today."
The company has juice to back up Amon's claims.
For one, Qualcomm is a few weeks removed from reporting a 41% increase in quarterly sales and a 69% jump in earnings per share amid strong demand for its chips. The growth rates in sales and earnings marked an acceleration compared to the quarter Qualcomm reported back in early February.
Meanwhile Amon — who took over as CEO on June 30, 2021 —revealed key new partnerships with major car companies BMW, General Motors and Volkswagen. The company has also been out there highlighting its yawning backlog of deals to support the expansion of the metaverse and upside potential from the shift to 5G smartphones.
Yet, that bizarre, below market price-to-earnings multiple persists.
"If you look at what's happening to us right now, our mobile strategy is really focused on premium and high-tier and they have proved to be very resilient." Amon added "In a market that is flat with a negative bias, we grew 50% because we are gaining share with Samsung. But that's not the story, we have a great mobile story, we are growing 50%. But automotive is growing, internet of things grew 61% year over year and I think we are just scratching the surface. We are really a processor company for all of those connected processor opportunities happening at the edge and we now have a number of end markets growing beyond mobile."
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