Qualcomm leads edge AI platforms on Huawei deal, says Baird

Baird analyst Tristan Gerra has maintained a positive outlook on Qualcomm Incorporated (NASDAQ:QCOM), naming it the top pick in edge AI platforms following a substantial cross-licensing agreement with Huawei. Gerra has assigned an Outperform rating to the stock and has set a price target of $400. The agreement between Qualcomm and Huawei includes a multi-year, broad patent arrangement covering 5G, compute, AI, and networking technologies.

Under the deal, Qualcomm committed to purchasing specific Huawei U.S. patents in compute, AI, networking, and other technologies. The deal is expected to increase the total value of Huawei's patent licensing agreements to over $6.9 billion. Gerra is confident that this cross-licensing agreement puts Qualcomm in a favorable position for upcoming edge AI content on Huawei hardware platforms.

Furthermore, Qualcomm recently extended its licensing agreement with Apple, reinforcing its licensing portfolio.

Gerra remains bullish on Qualcomm, projecting that agentic AI will become a secular growth driver in edge computing. The company's strong compute position and novel AI architectures make it well-suited to leverage these opportunities. The price target of $400 is based on a projected earnings per share estimate of $20.00 for 2030, resulting in a price-to-earnings ratio of 20, which is higher than the average 14 times next-twelve-month multiple due to Qualcomm's diversification and the catalyst of agentic AI across platforms.

However, Gerra also identified several risks for Qualcomm, including customer concentration, the threat of vertical integration, geographic risks, and potential delays in 5G rollouts. Qualcomm is a leading global wireless technology company that has been instrumental in the development and deployment of 3G, 4G, and 5G technologies in smartphones and other connected devices.