Has Qualcomm Stock Finally Turned a Corner?

Core Viewpoint - Qualcomm's stock surged 11% on October 27 following the announcement of its AI accelerators, indicating renewed investor interest despite competition from major players like Nvidia and AMD [1][2]. Qualcomm and Its Stock - Qualcomm has faced significant struggles among semiconductor stocks, maintaining its position as the leading producer of smartphone chipsets for decades [2]. - The current upgrade cycle for AI-enabled phones has not matched the robustness of previous cycles, and Apple is expected to drop Qualcomm as a chipset provider, impacting revenue [3]. Financial Performance - Qualcomm's net income reached nearly $8.7 billion in the first nine months of fiscal 2025, reflecting a 20% year-over-year increase [4]. - The company's price-to-earnings (P/E) ratio stands at 17, significantly lower than the S&P 500 average of 32, suggesting a potential undervaluation [4][12]. Market Opportunities - Qualcomm is diversifying beyond smartphone chipsets, with the Internet of Things (IoT) and automotive segments growing faster than the handset segment, contributing to 23% of its revenue [6]. - The AI chip market is projected to grow at a compound annual growth rate (CAGR) of 29% through 2030, highlighting the potential for Qualcomm's new AI accelerators [8]. Product Development - Qualcomm's first AI accelerator, the AI200, is set to launch in 2026, designed for cost-effective performance in large language models and AI inference [7]. - An upgraded AI250 accelerator is planned for 2027, promising 10 times the memory bandwidth of the AI200 [7]. Competitive Landscape - Qualcomm faces intense competition not only from Nvidia and AMD but also from tech giants like Alphabet, Amazon, Microsoft, and OpenAI, which are also developing AI accelerators [9][10]. - The uncertainty surrounding Qualcomm's ability to stand out in this competitive landscape may affect investor sentiment [10]. Future Outlook - While it is premature to conclude that Qualcomm's stock has turned a corner, the behavior of other AI stocks suggests potential for further gains [11]. - The low valuation and significant income growth could position Qualcomm favorably as it enters the AI accelerator market, potentially serving as a catalyst for stock price increases [12].