Qualcomm Inc (NASDAQ: QCOM) has bounced nearly 20% off its low in June, which, as per Steve Weiss (Chief Investment Officer at Short Hills Capital Partners), is an opportunity to pull out of this stock.
Weiss defends his dovish outlook on Qualcomm shares
At just over 11 times, Weiss agrees the stock is still reasonably cheap but the macroeconomic news, he added, warrants caution on “QCOM”.
You can’t ignore the news that’s coming out from around the world on cell phones. Qualcomm is not just a cell phone company. But that’s a big part of their business. And cell phones are down 25%.
In July, the San Diego-headquartered semiconductor company issued weaker-than-expected guidance for its current financial quarter. That was also a reason why Weiss sold the stock late last week.
For the year, Qualcomm shares are currently down more than 25%.
Consumer is cutting back on non-essential spending
Weiss expects the slowdown in cell phones to last as the ongoing inflationary pressures continue to make consumers cut back on non-essential spending. On CNBC’s “Halftime Report”, he said:
When people are forced with the choice of do I buy groceries, do I fill up my car with gas to get to work, or do I buy a new cell phone that only has a slightly better camera maybe, I think they’re going to choose sustenance over luxury.
According to Qualcomm, its operating expenses will likely be up 6.0% to 8.0% (sequentially) this quarter.
Last month, the multinational doubled down on its patent license agreement with Samsung for 3G, 4G, 5G, and the upcoming 6G mobile technology through the end of 2030.
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