The dynamics around NXP Semiconductor (NASDAQ: NXPI) stock rests solely on China and the U.S. as the two countries exchange words and threats over international trade. Already, the U.S. made good on its threat to slap tariffs on Mexico and Canada on steel imports. While the U.S. is about to make a deal with China to allow ZTE to operate again after paying around $1.5 billion, the resolution will move the NXPI buyout from Qualcomm forward.
Qualcomm is set to pay $127.50 a share for NXPI stock. At $114 a share, the stock still has over 10% in upside. Chances are good that investors who missed out adding the stock at $91 may still hold NXP to collect the premium when the deal closes.
Qualcomm’s (NASDAQ: QCOM) potential upside could have a different ending. Even after bottoming at $50 and closing at below $60, the stock does not have deep value at these levels. It needs a resolution between Apple (NASDAQ: AAPL) and suppliers in settling on a fair royalty rate.
When that unknown is cleared, QCOM stock could trade into the $65 - $80 range. But a ruling against Qualcomm would send the stock below $50. Given this is a 50/50 binary play, investors who don’t want to roll the dice may decide to sit on the sidelines with Qualcomm.
