It's been a long and ugly road to recovery for the Android smartphone market, but leading mobile chip giant Qualcomm (QCOM 9.74%) is signaling that the recovery is finally here. The latest quarter that ended in September (for Qualcomm, the end of its 2023 fiscal year) had lingering issues, but things are looking up to kick off fiscal 2024 -- in spite of some ongoing worry about the health of smartphone demand. Here's what investors need to know when weighing whether or not this is a value stock worth buying.

Good riddance to 2023

Much like the bear market of 2022, 2023 is going down as another year worth forgetting -- at least for Qualcomm investors. After booming sales of smartphones during the pandemic, consumer electronics demand fell off a cliff starting in the second half of 2022. A hoped-for rebound never came in 2023.

The story was much the same in the fourth quarter of fiscal 2023 (the three months ended in September). Revenue was $8.63 billion, just above the midpoint of guidance, and a 24% year-over-year decline. Earnings per share (EPS) fell a whopping 48% from last year, and adjusted EPS fell 35% -- although adjusted EPS of $2.02 was actually above management's guidance.

Related to that adjusted EPS figure, Qualcomm also reported soaring free cash flow (FCF) to close out its fiscal year. That's an effect due to the elevated inventory of chips it was carrying on its balance sheet. As I predicted early this year, as Qualcomm cut costs and started offloading that inventory, a big cash infusion was coming. Q4 FCF was $3.8 billion, up from just $812 million the same time last year when the smartphone sales slump began. Full-year FCF was $9.8 billion, up 44% from 2022.

This FCF explosion also helped replenish the balance sheet. Qualcomm ended September with cash and short-term investments of $11.3 billion, offset by debt of $15.4 billion.

In all, I'm happily saying goodbye to 2023. But what about 2024? It's getting off to a good start for Qualcomm.

New growth trends emerge

For the first quarter of fiscal 2024 (the final three months of calendar year 2023), Qualcomm is now expecting a healthy sequential increase in revenue to a range of $9.1 billion to $9.9 billion. And better still, there's an outside chance year-over-year growth is back too, as revenue in Q4 last year was $9.46 billion. A return of growth to EPS and adjusted EPS is likely now too.

A number of things are contributing to what could be a solid 2024 for Qualcomm. It just had its Snapdragon Summit, where new Qualcomm PC chips gunning for Intel's (NASDAQ: INTC) and AMD's (NASDAQ: AMD) dominance of the laptop market could make some headway. And Qualcomm's work in on-device AI for high-end smartphones will soon make their debut as well.

But a recovery in overall consumer demand for smartphones --  especially in China -- is what will really move the needle. And it looks like that return of demand is here, even in spite of Huawei now selling its own phones and Qualcomm anticipating no sales going forward from the Chinese tech giant. Other Chinese phone makers still very much want Qualcomm as a chip partner, though, as does Apple (NASDAQ: AAPL) (albeit probably begrudgingly). Apple and Qualcomm recently renewed a wireless chip supply agreement just after Huawei announced its new flagship phone a couple months ago.

The automotive business also continues to do great things. Though the EV market has been catching headlines for all the wrong reasons as of late (high interest rates lowering demand), Qualcomm plays in the digital cockpit side of things. Cars of all kinds -- EV and otherwise -- are getting digital infotainment updates that more closely resemble a smartphone. Qualcomm's Q4 auto revenue was $535 million, up 25% from last year, and could be another standout area again in the year ahead.

Qualcomm doesn't provide full-year guidance, but things are off to a good start.

Shares now trade for about 12 times Wall Street analysts' expectations for 2024 EPS, and about 13 times expected FCF. I bet too early on a Qualcomm comeback earlier in 2023, but patience could finally be rewarded next year. I remain cautiously optimistic that Qualcomm is still a good semiconductor stock to own right now.