To be fair, Rosenblatt analyst Jun Zhang had a good point about Qualcomm (NASDAQ:QCOM) when he upgraded it a week and a half ago — it’s arguably more ready than its rivals for the advent of 5G connectivity. At the same time, Cowen analyst Matthew Ramsay was also on target earlier this month when he upgraded Qualcomm stock to “Outperform.”

His take? An impending end to costly (and distracting) litigation over the company’s technology-licensing practices.

This is a case, though, where traders may have bought a bit too aggressively, and too soon.

That is to say, while both of the bullish thesis have their merits, there’s going to be a stretch of time before either theory becomes reality. QCOM stock is vulnerable to profit-taking in the meantime.

What They Said About Qualcomm Stock

Rosenblatt’s Zhang’s explanation was straightforward. He noted, “Qualcomm will benefit from growth in the 5G smartphone market over the next few years,” adding that its “5G RF module [modem] is better positioned” than those made by rivals like Huawei or Intel (NASDAQ:INTC). He even hinted that Apple (NASDAQ:AAPL) may choose to use the 5G modem in question in its next generation of iPhones.

That was enough to inspire Zhang’s new QCOM price target of $70.

Although Rosenblatt’s analyst didn’t explicitly point it out, Qualcomm’s next-generation 7 nanometer Snapdragon smarpthone processor is also built from the ground up to get the most out of its 5G modems, and at the same time provide greater raw computing power.

5G, by the way, is shorthand for fifth-generation wireless connectivity. Although it is currently available (as a beta test of sorts) in some areas, the current standard and commonly used technology is 4G. The leap to 5G is a big one though, as it can deliver data as much as 20 times faster than 4G technology can.

That higher data capacity also helps usher in the data-intensive era of the Internet of Things, as well as make smartphones a stunningly powerful kind of device.

Cowen’s Matthew Ramsay saw different bullish catalysts on the horizon. He specifically notes “the NXP bid abandoned, a $30 billion buyback program underway, recent $700 million in good faith catch-up payments from a large OEM royalty dispute (we believe Huawei), pending court dates suggesting progress in royalty disputes with Huawei/Apple, and solid progress demonstrated on cost-cutting initiatives.”

Ramsay’s new price target on Qualcomm stock is $80, up nearly 15% from its current price.

Think Like a Trader With QCOM Stock

Both analysts are likely to be right about their outlooks. In both cases though, it’s going to be a while before their optimism is vindicated. QCOM shares are trading at just under $70 right now, up 25% since late June largely because investors have been pricing in what Ramsay and Zhang (and others) see.

However, none of the stock’s newly bullish analysts likely mean Qualcomm stock should reflect all these things just yet.

It’s a scenario that has haunted investors since the dawn of the stock market. Almost everyone knows stocks are owned not for where the underlying company is, but where it’s going. Yet, the future can be fuzzy and it’s not always clear how long it will take an corporation to reach its presumed destination, so investors must also factor in the opportunity cost of keeping money tied up in one particular investment.

And that’s the proverbial no-man’s land Qualcomm stock finds itself in right now. It has been a tremendous performer of late, but the optimism that’s prompted this performance is based on situations that won’t likely pan out in full until next year.

A lot can happen to QCOM stock in the meantime.

Or, perhaps more alarmingly, nothing could happen to the stock in Qualcomm in the meantime. Sheer boredom between now and then can also spark a wave of profit-taking in shares of a company that’s still dealing years’ worth of waning revenues and profits.

And, despite its seemingly bright future, it’s noteworthy that the analyst community as a whole still doesn’t see any revenue growth in the cards for QCOM next year. The pros collectively do see per-share earnings growth in 2019, but only a return to 2017’s sub-par levels.

Bottom Line for Qualcomm Stock

However, QCOM stock investors shouldn’t misread the message.

Qualcomm is likely on the road to recovery, just as Zhang and Ramsay suggest. Stock in Qualcomm is vulnerable in the meantime though, as traders have priced-in results and headlines that are months rather than days away. It’s also not to say preemptively taking profits is the right move. Although it’s difficult to justify the current price of Qualcomm stock given the plausible future that can be seen, the trading crowd can remain irrational for a long, long time with the right inducement.

That’s all simply to say, if it looks like QCOM stock is on the verge of suffering a correction, that’s likely to be exactly what happens.

And for what it’s worth, although the analyst community has had ample opportunity to raise their QCOM stock price targets, the consensus target on Qualcomm is still just a tad below $70, where shares are currently priced.

Clearly, most of the analysts don’t see what Ramsay sees.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.