The evolution of the mobile phone has handsomely profited Qualcomm’s shareholders.
It was 33 years ago this month that Qualcomm (QCOM 1.67%) stock debuted. The company launched its initial public offering (IPO) to attract funding for research on code-division multiple access technology, better known by its acronym CDMA.
The research in communications technology paid off, as Qualcomm became the leading chipset maker for communications. This success generated massive wealth, particularly for early investors in the semiconductor stock.
Qualcomm’s stock growth
A $1,000 investment in Qualcomm’s IPO would be worth $450,000 today. This figure assumes reinvestment of dividends paid to investors. The company initiated the dividend in 2003 and has increased the total annual amount every year since that time. Not including those dividends, the returns would leave an investor with just under $300,000 in Qualcomm stock.
QCOM total return level; data by YCharts.
The company’s continuous innovations in chips for cellphones drove that growth, placing it in the center of the burgeoning wireless industry. It was 1995 when Qualcomm finally rolled out its CDMA standard, and most cellphone manufacturers adopted it quickly.
Growth in the stock surged after the company exited joint ventures with wireless communication companies, shifting its focus exclusively to chipsets in 1998.
Since then, Qualcomm has continued to innovate and add patents based on technical improvements. It has maintained its technology lead, even helping to support the move to smartphones. So successful is this process that companies such as Apple have repeatedly failed to replace Qualcomm’s chips with their own.
Moreover, Qualcomm has prepared itself for a world where end users rely less on smartphones. It has innovated in the Internet of Things and automotive spaces to maintain its central role in the communications industry.
And even as the 5G upgrade cycle has run its course, Qualcomm has pivoted into artificial intelligence (AI) to give consumers and businesses yet another reason to upgrade their smartphones.
Ultimately, Qualcomm’s formula for success, which it began to outline around the time of its IPO, continues to drive its business today. Its approach will likely continue to benefit both early and more recent investors in the stock.
Will Healy has positions in Qualcomm. The Motley Fool has positions in and recommends Apple and Qualcomm. The Motley Fool has a disclosure policy.