QCOM Stock Analysis: AI Is Not the Only Reason to Buy Qualcomm

AI Growth and Qualcomm's Position - Qualcomm's exposure to generative AI-compatible chips is a significant factor in its stock analysis, contributing to a nearly 40% stock price increase over the past six months [1] - The company has integrated AI features into its Snapdragon system-on-a-chip smartphone platform and plans to unveil an AI chip for PCs this year [2] - While Qualcomm is a solid AI contender, the material impact of AI on its operating performance will take time, and the current AI mania may not provide further significant stock boosts [2] Non-AI Catalysts and Business Recovery - Qualcomm's legacy businesses, unrelated to AI, could sustain the recent stock rally and help the stock surpass its 2021 bull market high [1] - Handset sales increased by 16% year-over-year in the latest quarter, indicating a normalization in smartphone demand [4] - The recovery in Qualcomm's internet of things (IoT) business is also expected, though at a slow pace, which could drive incremental gains for the stock [4] Valuation and Future Growth Potential - Qualcomm's stock trades at 15.8 times forward earnings, remaining reasonably priced despite the AI hype, with potential for multiple expansion [5] - Consensus forecasts predict a 50% earnings rebound for the current fiscal year (ending September 2024) but only 10.6% growth for the next fiscal year [6] - Better-than-expected growth and factors like the extension of its modem supply agreement with Apple could lead to a re-rating of the stock to a low-20s forward multiple [6] Stock Price Outlook - A move to prices north of $200 per share is within reach, with the stock currently trading around $150 per share, making it a worthwhile investment for continued recovery [7]