The market is seeing a sea of red on Tuesday, but Qualcomm (NASDAQ:QCOM) is bucking the trend. Although many stocks and semiconductor names are trending lower today, QCOM stock is up by about 3%.
The main reason for this rally? Apple (NASDAQ:AAPL). Because the tech giant has failed to get its own 5G modem chip rolling, rumors are saying the company will continue to use Qualcomm’s chip. TF International Securities analyst Ming-Chi Kuo posted the following on social media:
“My latest survey indicates that Apple’s own iPhone 5G modem chip development may have failed, so Qualcomm will remain exclusive supplier for 5G chips of 2H23 new iPhones, with a 100% supply share (vs. company’s previous estimate of 20%).”
Kuo argues that the company’s earnings and revenue will “likely beat market consensus” in the second half of 2023 and first half of 2024. That’s due to its reported continuation as the sole 5G chip supplier for the iPhone. Although Apple likely plans to move forward with its own chip, Kuo believes Qualcomm will be successful enough in its other businesses to offset the eventual loss of Apple’s business.
QCOM Stock Remains in a Bear Market
If this news is true, it’s a significant development for QCOM stock. Shares are rallying on reports but are still down roughly 32% from the all-time high. Still, it’s actually performing better than many well-known semiconductor stocks like Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC).
It’s not clear if or when the rumors will be verified — or if QCOM stock will react like bulls hope. However, it appears Apple and Qualcomm are again willing to sideline any potential issues with each other for a win-win scenario. Keep in mind, the two were in quite the legal spat several years ago.
Previously, Apple was suing Qualcomm for $1 billion, but then reversed course. They agreed to pay Qualcomm more than $4 billion and came to terms on a “six-year patent license and chip supply agreement.” Even after the deal, though, there was concern about Apple aggressively trying to develop its own 5G chip.
Clearly, that endeavor is not panning out as well as Apple had hoped. At least for now, the relationship between the two companies looks like it will continue.
On the date of publication, Bret Kenwell did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.