Qualcomm Inc. (NASDAQ: QCOM) experienced a significant drop of over 7% last Friday due to concerns about a trade dispute with China and a potential AI bubble. The sell-off impacted the semiconductor sector, highlighting Qualcomm’s vulnerability despite a recent strong rally. However, shares have rebounded by 5% this week, showing some resilience.

The drop in Qualcomm’s stock price was influenced by multiple factors including sector weakness, trade tensions, and doubts about its position as a chipmaker instead of an AI leader like NVIDIA or AMD. The market’s lack of conviction in Qualcomm’s future prospects was evident in the sell-off, emphasizing the need for lasting gains in Q4.

Despite the recent decline, Qualcomm’s stock has shown signs of support around the $155-$160 level, indicating investor interest at that price range. The technical indicators suggest a neutral stance, but Qualcomm needs to avoid further losses to maintain its upward momentum in the market.

The upcoming earnings report in November will be crucial for Qualcomm, as it will determine the stock’s performance for the rest of the year. Analysts are looking for growth in new areas like AI devices and IoT to offset slowing smartphone demand. The report will also address concerns about regulatory scrutiny in China and the impact of recent acquisitions on Qualcomm’s business.

Qualcomm’s valuation, trading at a discount compared to peers like NVIDIA and AMD, provides a safety net for investors amid market volatility. The company’s strong balance sheet and dividend yield make it an attractive option, but management needs to demonstrate progress in diversification efforts to change market perception and maintain investor trust.

Read more at Nasdaq: Qualcomm: What Last Friday’s Drop Says About Its Q4 Prospects