CK Capital
Defense/Space/Tech/Photonics Investor, Co-Owner of CV Research
Qualcomm's licensing position looks stronger after a jury verdict in its dispute with Arm. StockSavvyShay reports that a five-year royalty clause potentially worth about $1.5 billion still awaits the judge's decision; the outcome could shape future licensing agreements as Arm expands into selling silicon. x.comÂ
Qualcomm is underappreciated: Meta, Microsoft and Amazon all signed on in one summer, yet the stock is stuck in a range at a discount to many peers. Its FY29 non-handset revenue target rose from $22B to $40B, including $15B from data centers, with Meta launching its data-center CPUs and Microsoft deploying its compute on Azure. Amazon's multi-generation AWS custom-chip deal is already in production, with warrants vesting only as Amazon pays up to $60B. It also has a $65B auto design pipeline. x.comÂ
Qualcomm could protect margins by avoiding $1.5B in Arm royalties and gain leverage in royalty negotiations. Per @StockSavvyShay, a jury favored Qualcomm, but a judge has yet to decide a five-year royalty clause potentially worth about $1.5B. It is a nice little win, not a game changer. x.comÂ
Intel's production was reportedly affected by a pause at its Israel fabs, which should benefit competitors Arm and AMD. Both look good on that basis. x.comÂ
Qualcomm's strained relationship with Arm could hurt its expansion into new markets because it needs technical support from the partner that controls the ISA. The jury awarded Qualcomm $2 on two of six licensing claims and found for Arm on the other four; Arm still has ways to cause Qualcomm pain if it chooses. x.comÂ
Qualcomm has upside from renewing its global patent license agreement with Apple, effective April 1, 2027. x.comÂ
Arm's low blended royalties leave pricing and mix leverage that makes earnings look massively understated at 110x forward P/E. It collects about 7 cents per chip overall, versus $1 on compute and networking chips and $0.85-$0.90 on smartphones. An 8-cent bump to 15 cents per chip is a hypothetical $5-6 billion royalty-revenue scenario, which would be pure cash. Mix shift and price increases are coming, though royalties may not double. x.com x.comÂ
The bearish call on Qualcomm was completely wrong. As @JDorbal1989 points out, Qualcomm renewed its global patent license agreement with Apple, effective April 1, 2027. x.comÂ
Anduril's BlueChip partnership is huge for Qualcomm because it extends its role from radio chips to secure US military and government laptops. BlueChip uses Snapdragon X; preorders are planned for 2027, and some supplier agreements remain unfinished. x.com x.comÂ
Qualcomm's multi-generation AWS collaboration on custom AI data center silicon and inference shows its data center customers are becoming clear. Qualcomm confirmed the AWS deal is baked into its $15 billion FY29 data center revenue target, which should remove doubt about hitting that number; investor relations confirmed this despite @bubbleboi's objection. Qualcomm remains an execution beneficiary, with its data center value moving toward the upside case. x.com x.com x.comÂ
AMD and Intel look undervalued against Arm, while Qualcomm faces two hellish years. AMD is worth only 2x Arm despite 6x higher, faster-growing net profit, and Intel only 70% more than Arm, though its CPU business alone should be worth twice as much on a normalized basis, with foundry covering the rest. Qualcomm was hit by Apple and then memory prices, is being outcompeted by NVIDIA in automotive, and its AI racks are pure desperation. x.comÂ
Qualcomm has little downside with Amazon having come in as an investor at around $160 a share. Investors give it almost no credit for AI, wearables, robotics and auto, and those businesses can do the heavy lifting to keep the stock steady next year. x.comÂ
