Qualcomm climbs as it seeks to diversify itself by expanding into other industries

Yahoo Finance's Ines Ferre joins the Live show to break down Qualcomm's earnings gains, citing the CEO's intentions to expand upon their technology by manufacturing for the automotive industry and perhaps even the metaverse.

Video Transcript

JARED BLIKRE: Qualcomm is surging to another record high after hosting an investor day that left analysts positive on the chip company's prospects. And that's ahead of the much anticipated Nvidia earnings we have after the bell. Now Yahoo Finance's Ines Ferre joins us now with all the details. Let's start with Qualcomm. This is a stock that really broke to the upside yesterday on their investor day. Lots of excitement about the revenue raised. What's going on here?

INES FERRE: Yeah, that's right. So Qualcomm put out some targets-- financial targets and targets for its individual units as well, because the bottom line is, is that this company is diversifying itself from the smartphone chip industry and going into other industries. So let's take a look at some of the targets that the company announced. We have a full screen for you.

The company saying that revenue can top $46 billion by 2024. Still seeing revenue rise in QCT. That's its core smartphone business. But revenue from IoT-- that's the internet of things, that's smart devices connected to the web-- that's expected to reach 9 billion by fiscal 2024. Autonomous driving chip sales for the auto industry, those are expected to hit $3.5 billion in five years.

The takeaway here is that their technology, according to the CEO, can really scale from anywhere from a watch to a very complicated platform on an autonomous driving vehicle. And yesterday, in fact, the company announced a deal with BMW where BMW will be using Qualcomm chips in its next generation of self-driving systems that will be for production in the year 2025.

Now CEO Cristiano Amon spoke with Julie Hyman, with Brian Sozzi this morning. And Amon basically said, when you think of the cloud, think of Qualcomm, IoT, the internet of things, and the broad, broad products there. And he was asked also about Qualcomm's involvement with Metaverse. Take a listen.

CRISTIANO AMON: One thing is common to all of those different versions of how we [INAUDIBLE] into the Metaverse, is you're going to need the device, and you're going to wear it. And it's going to allow you to have an experience [INAUDIBLE] revert to reality and augment the reality. That's what we do. And for all the devices that are being commercially deployed, you'll have one thing in all of them, which is Snapdragon XR. We're very excited, and we have a long design pipeline for XR devices.

INES FERRE: And Qualcomm has been working with Meta on virtual reality, but the bottom line is that the Street seems to be very optimistic also about this company's plans, as it's diversifying itself into the Metaverse, the internet of things, autonomous driving. So it's really a situation where you can see sort of, like, the broad, broad use of its chips.

AKIKO FUJITA: Yeah, Ines, it feels like every company's got this director from the top saying you must talk about the Metaverse at every opportunity. Let's talk about the supply chain concerns. That's obviously something that is hitting every chip maker out there. What do we hear from Qualcomm on that front?

INES FERRE: Yeah, so Amon basically said that they put expansion plans into place with their suppliers and that their supply will get better over time. But of course, they-- he said, we're still sure there is still more demand than there is supply. He said that some of the businesses would grow faster if they had more supply. And he did say, though, that when they enter into 2022, they will have a much better balanced supply-demand-- that they will have a much better balance between that supply and demand imbalance that you're seeing right now. So things should get better in 2022 for the company.

JARED BLIKRE: Everything's going to get better in 2022, Ines. Yahoo Finance's Ines Ferre, thanks for that report.