A Stock Back in the Conversation
Qualcomm is having a strong session, building on its pre-market highs, on the back of positive news from its investor day. The shares are up roughly 7% — a notably large move for a name that has frequently struggled to gain traction even on its own earnings releases.
This is a meaningful reversal of narrative. Through 2024 and into the early stages of 2025, Qualcomm was largely left in the dust among the chip names as Nvidia and AMD ramped up and captured the market's attention. Now it is back in the conversation. The catalyst is straightforward: the company raised revenue guidance for the parts of its business beyond what it has traditionally earned money on — smartphones — and it raised those numbers significantly.
Why Investor Days Can Matter More Than Earnings
There is a broader lesson worth drawing from this move. Corporations publish calendars for their earnings releases, but it might be even more useful to have a calendar of investor days. So many stocks move sharply on investor days and on the forward-looking updates that management provides during them — sometimes more than they move on the actual earnings events. Qualcomm is a clear example: a stock that has had trouble moving on earnings is up big today purely on guidance and strategic commentary delivered at its investor day.
The Numbers Behind the Diversification Story
What has investors excited is the diversification away from smartphones and the prospect of a much bigger overall footprint, with the company making money from many more places. Several specific targets stand out:
- The handset revenue target was doubled for the fiscal 2020 through fiscal 2029 window, reaching $40 billion.
- The data center revenue target was set at $15 billion.
That figure of $40 billion in non-handset revenue is a real benefit, reflecting growth across the Internet of Things, industrial, and automotive markets, all of which are performing well. The company has, in effect, maintained its automotive and handset businesses while branching out into other areas that carry higher margins — and higher margins create the opportunity for more growth. This transition has taken a couple of years to execute, but it has been carried out successfully, and the stock has performed well ever since the company began making these moves.
The Meta Partnership and the AI Buildout
A central piece of the story is a newly announced partnership with Meta Platforms, described as a multi-generational collaboration. Through this, Qualcomm is attempting to move into the full-stack business and to compete in the AI infrastructure buildout. A key technical theme is high-bandwidth chips — exactly what an executive was discussing in an interview earlier in the day. But the opportunity set is wider than that single product area: it includes wearables and AI more broadly, giving the company many different arenas in which to participate.
Beyond Meta, the company also disclosed that it has landed a new customer overseas in the Far East. For those wanting more detail, the company's CFO gave an interview with Nicole Pedales that morning, available on the broadcaster's channel.
The Chart Setup
From a technical standpoint, the stock has had a dramatic run. It more than doubled from April up until early June — or the end of May — when it reached about $260. Since then it has pulled back, with declines down to around $190, a level it has tested a few times, and it is now rallying back. The shares currently trade around $212.
The price sits at what is described as a pivotal intersection: the 21-day moving average. The stock pushed above that average earlier in the session and then began to drift back below it. The interpretation is that if it can hold above the 21-day line, it probably has room to run further; if it cannot, that signals potential short-term weakness worth paying attention to — independent of any longer-term bullish view on the company itself.
The Bull Case: A Calendar Spread
The bullish expression of this view is a calendar spread, structured as a paper-money trade. The approach: measure out the expected move, look at the right-hand column on the trading platform to gauge that move, and pick a target strike roughly $10 to $12 above where the stock is trading — in this case the $225 strike.
The specific structure:
- Buy the out-of-the-money 225-strike call in the July 17th monthly options, which expire in about 22 days.
- Sell the same 225-strike call in the near-term July 2nd weekly options, which expire in about 7 days.
- This is a two-week-wide calendar, put on for a net debit of about $4.35. It was trading roughly a dollar higher (around $5.35) shortly afterward, because the stock had recovered from a swoon earlier in the late morning.
A useful lesson sits inside this trade: when it was established, the stock was below $210; as it moved higher and closer to the $225 strike, the price of the calendar expanded. The debit paid is the maximum risk — whether that is $435 or $535 depending on the entry. In exchange, the trade provides upside exposure over a two-to-three-week time frame, with the additional ability to roll the short option forward (for example into the July 9th or July 10th expirations). Each roll can generate credit, which chips away at the net debit and lowers the break-even, increasing potential profitability.
There is roughly a profitable range between about $205 and $250. What you do not want: the stock to move lower, or to surge two-to-three standard deviations and climb back above roughly $250, because that is where the position begins to generate losses. Ideally, the stock grinds up toward the $225 strike.
The Bear Case: A Short Call Vertical
The neutral-to-bearish counter-position is a short call vertical — a more passive strategy. It does not depend on a long-term bearish view of the company (the fundamental growth runway is acknowledged as substantial); it is instead a chart-driven trade targeting possible short-term weakness around that 21-day moving average.
The structure:
- Use the July 24th weekly options, which is a deliberate choice because the company reports earnings on the 29th. Trading the July 24th expiration avoids the earnings event, which could send the stock higher or make it far more volatile. This leaves about 29 days to expiration.
- Sell the out-of-the-money 230-strike call and buy the 235-strike call — a $5-wide spread.
- This collects a credit of roughly $1.45 to $1.55, with the possibility of getting closer to $1.70 by waiting or by scaling into the trade rather than entering all at once (a trade-off, since waiting risks the opportunity but can fetch a higher credit).
The credit collected is the maximum profit. The goal is for the stock to stay below the 230 strike, allowing the trader either to keep the full credit or to buy the spread back cheaper as expiration approaches over the next four weeks. Because the spread is $5 wide and the credit is around $1.45, the risk is about $350 to $355 — an outsized risk relative to the reward, but compensated by a higher probability of success.
The break-even, where losses begin, is above $231.45 — over 8.5% above the current share price. That cushion means the position profits whether the stock falls from here, stays right around $212, or even rises somewhat, so long as it remains below $231.45. The short 230 strike carries roughly a 67% probability of finishing out of the money at expiration.
The Two Sides in Summary
The debate cleanly captures two temperaments. The bullish calendar spread is the more aggressive stance: it needs the stock to move and grind higher toward $225 to pay off. The bearish call vertical is the more passive stance: the stock can simply stay where it is — or even drift higher within limits — and the position can still be profitable, trading a worse risk-reward ratio for a substantially better probability of success.
