Qualcomm Stock Outlook: Is QCOM the Next Nvidia in the Making?

Stocks to buy

Qualcomm (NASDAQ:QCOM) stock has surged 53% this year as interest in edge AI grew. With a relatively low price-earnings ratio of 27-times, Qualcomm is positioned to continue to move higher.

That’s despite a recent 5% drop because of software and gaming issues on Snapdragon-powered AI PCs.

Qualcomm remains pivotal in the AI hardware sector. A semiconductor maker with a focus on chips tailor-made for devices, significant attention has been paid to Apple’s (NASDAQ:AAPL) recent AI iPhone debut and its goals of producing more chips in-house.

That said, rival Samsung has indicated it may form closer ties with Qualcomm, prompting shares to remain strong.

These compatibility challenges, akin to Apple’s Intel to M-series shift, are expected to resolve over time, potentially offering an entry point for missed opportunities.

QCOM stock rose 57% in 2024 and 85% over the past year, boosted further by a rumored Samsung partnership.

Let’s dive into what to make of these ongoing factors.

Revolutionary PCs

Qualcomm launched its Snapdragon X processors this week, aiming to disrupt the Intel-AMD dominance in PCs.

Qualcomm’s management team emphasized the importance of partners in driving the adoption of AI PCs.

The company’s channel program supports over 20 new laptops under Microsoft’s (NASDAQ:MSFT) Copilot+ initiative, partnering with major players in the laptop space to scale this new category of devices.

In a pre-launch interview in May, the company highlighted their aim to educate, train, and innovate with partners to scale Snapdragon X series laptops.

Qualcomm, renowned for Android smartphone processors like Samsung’s Galaxy S24 series, had a minimal presence in PC chips since 2018.

With Microsoft and leading OEMs’ backing, Qualcomm introduced Snapdragon X Elite and Snapdragon X Plus processors to expand its footprint in the PC market.

Qualcomm emphasized that Snapdragon X chips deliver superior all-day battery life and excel in AI workloads compared to Intel and AMD counterparts.

Houser stressed the importance of providing top-tier processing, battery life, and on-device AI for end users, highlighting Snapdragon X’s role in transforming PCs and creating opportunities for channel partners.

These chips integrate CPU, GPU, and NPU technologies similar to Intel Core Ultra and AMD Ryzen 8040 processors driving recent AI PC innovations.

New Releases with Motorola

Motorola has launched the Moto S50 Neo shortly after its initial announcement. Positioned alongside the Razr 50 and Razr 50 Ultra, it resembles the Chinese version of the Moto G85, following last year’s Moto G84.

The smartphone offers a choice between standard glossy black or more vibrant purple and yellow finishes. 

All variants feature a 6.7-inch pOLED display with 1080p resolution, 1,600 nits peak brightness, and a 120 Hz refresh rate, protected by Gorilla Glass 5. It includes an in-display fingerprint scanner and a 32 MP front camera.

The Moto S50 Neo features a 50 MP main camera with Sony’s IMX882 sensor and an 8 MP ultra-wide-angle camera. It runs on a Qualcomm Snapdragon 6s Gen 3 chipset, includes a 5,000 mAh battery with 30 W wired charging, and starts at CNY 1,399. 

Strong Partnership with Microsoft

Microsoft’s new AI PCs, featuring Snapdragon X Elite and Snapdragon X Plus, debut without native support for key Adobe apps like Premiere Pro and After Effects.

Although some Adobe programs are Arm64 optimized, others such as InDesign and Illustrator will receive Arm versions starting July 2024, with video editing tools expected later in the year, according to Windows Central’s report on Aaron Woodman’s statements.

The new Qualcomm chipsets demonstrated impressive performance and battery improvements in testing but faced software challenges.

Non-native Arm apps ran through emulation, causing occasional performance issues, particularly noticeable with resource-intensive apps like Adobe Premiere Pro and After Effects.

Windows Central noted that running Premiere Pro via emulation was previously impractical but has since improved.

During Asus VivoBook S 15 testing, Adobe programs weren’t used, but Windows Studio Effects functioned well.

Premiere Pro under emulation faced challenges with layers and effects, yet rendering was notably faster than on Intel devices. Simple 1080p 30fps video editing proved relatively smooth, per their tests.

Bottom Line on QCOM Stock

If this AI growth trend persists as many expect, we’re going to certainly need a lot of chips. Qualcomm is uniquely positioned in one key niche segment of the market to take advantage of these trends.

While the company may be getting lost in the fray relative to other high-growth chip makers such as Nvidia (NASDAQ:NVDA), I think this is a stock investors may want to focus on in the coming quarters.

If results continue to come in better than expected, this is a stock that could fly much higher from here.

On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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