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Yahoo Finance Plus Time to Buy Apple or Qualcomm Stock for Their Renewed Partnership
The renewal of Apple AAPL and Qualcomm’s QCOM partnership is highlighting the start of this week’s trading session as investors await CPI data on Wednesday.
Easing inflation has been kind to Apple’s stock which has climbed +38% this year versus Qualcomm’s virtully flat performance. Still, Qualcomm’s stock spiked roughly +4% today with Apple's stock up +0.66%. The continuation of their partnership is reassuring to Qualcomm investors as it was scheduled to end this year but has now been extended to 2026.
Of course, there are rising concerns that the Chinese goverment will continue its efforts to ban iPhones domestically which will naturally affect Qualcomm as well. However, momentum is building for both tech giants with Apple scheduled to release its iPhone 15 on Tuesday and Qualcomm now solidified with providing its modem chips for the foreseeable future.
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Partnership Growth (EPS)
Starting their partnership in 2019, Apple and Qualcomm have experienced steady growth but are expecting dips in their top and bottom lines this year.
Mostly attributed to inflationary pressures and a softer recovery in China, Qualcomm's fiscal 2023 results are being affected the most. With that being said, Qualcomm is coming off a record year that saw earnings at $12.53 per share with FY23 EPS projected to drop to $8.31 a share.
Qualcomm’s FY24 earnings are forecasted to stabilize and rise 10% to $9.13 per share. Plus, FY24 projections would still represent 134% EPS growth since the company launched its partnership with Apple and posted earnings of $3.54 a share in 2019.
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As for Apple, annual earnings are expected to dip -1% this year but rebound and rise 9% in FY24 to $6.60 per share. More impressive, FY24 projections would represent 122% EPS growth since its Qualcomm partnership with Apple’s 2019 earnings at $2.97 a share.
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Partnership Performance
Since their partnership officially started in April of 2019, Apple’s stock has now skyrocketed +265% with Qualcomm shares soaring +90%. Both have outperformed the Nasdaq’s +70% and the S&P 500's +54% during this time span.
Even better, when including dividends, Apple's total return is +278% with Qualcomm at +111% to easily top the broader indexes.
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Dividend Boost
As forementioned in their total returns, Apple and Qualcomm have continued to boost their dividends since their partnership started. Qualcomm certainly stands out with a 2.91% annual yield that towers over the S&P 500’s 1.36% average.
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While Apple offers a modest 0.54% dividend yield, it has increased in each of the last five years at a 6.07% growth rate which is just above Qualcomm’s 5.35%.
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Bottom Line
Considering their stock performances and growth since partnering, Apple and Qualcomm have complemented each other quite well. For now, Apple and Qualcomm's stock both land a Zacks Rank #3 (Hold).
While there are still fears of a further crackdown on iPhones in China, these companies should continue to mutually benefit each other and reward longer-term investors.
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QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
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