Cautious Outlook on Qualcomm’s Alphawave Acquisition: Sell Rating Issued Due to High Premium and Limited Transparency

Wells Fargo analyst Aaron Rakers maintained a Sell rating on Qualcomm (QCOM – Research Report) yesterday and set a price target of $140.00.

Aaron Rakers has given his Sell rating due to a combination of factors involving Qualcomm’s recent strategic decisions. The company’s acquisition of Alphawave, while strategically beneficial for its data center ambitions, comes at a significant premium. This $2.4 billion all-cash deal represents a 96% premium over Alphawave’s previous closing price, which raises concerns about the financial prudence of such an investment.
Furthermore, while Alphawave’s technology could complement Qualcomm’s existing CPU and NPU designs, the acquisition’s small scale relative to Qualcomm’s overall operations may not significantly impact its financial performance in the near term. Additionally, the lack of a conference call to discuss the acquisition further limits transparency and investor confidence. These elements combined contribute to a cautious outlook, prompting the Sell rating.

Rakers covers the Technology sector, focusing on stocks such as Intel, Micron, and Nvidia. According to TipRanks, Rakers has an average return of 21.9% and a 64.40% success rate on recommended stocks.