Will Qualcomm's Deep Foray Into AI Realm Work Wonders for the Stock?

Qualcomm Incorporated QCOM is focusing on a deeper foray into the realm of AI (artificial intelligence) capabilities within the laptop and desktop business. The strategy is aimed at moving beyond the slowing smartphone industry, which is its primary source of revenue. In addition to diversifying its revenue stream, this is likely to extend QCOM’s AI footprint. 

The company has launched the Snapdragon X chip for mid-range AI desktops and laptops. AI PCs incorporate an additional processor designed specifically to accelerate AI capabilities. This specialized hardware enhances features like personal assistants and task automation. One of the significant selling points of AI PCs is their enhanced battery life. Qualcomm's chips, which are based on Arm Holdings Plc designs, promise extended use without frequent charging.

Leveraging processors with multi-core CPUs with cutting-edge features, amazing graphics and worldwide network connectivity, Qualcomm Snapdragon mobile platforms are fast and have superb power efficiency. Smartphones and mobile devices built with Snapdragon mobile platforms enable immersive augmented reality and virtual reality experiences, brilliant camera capabilities, superior 4G LTE and 5G connectivity with state-of-the-art security solutions.

Tech Firms Focusing on AI

NVIDIA Corporation NVDA is rapidly gaining traction in enterprise AI, expanding its market beyond cloud providers. Major companies across industries are integrating NVIDIA’s AI platforms to automate workflows, enhance productivity and improve decision-making. The company’s DGX Cloud AI infrastructure, which allows enterprises to train and deploy AI models at scale, has seen increased adoption. The expansion of CUDA software and AI frameworks strengthens NVIDIA’s ecosystem, making it the preferred choice for enterprises developing AI applications. With AI adoption expected to accelerate in 2025 and beyond, NVIDIA’s software and AI cloud solutions are a significant revenue driver.

Intel Corporation INTC is investing to expand its manufacturing capacity to accelerate its IDM 2.0 (Integrated Device Manufacturing) strategy. The company is taking various decisions to gain a firmer footing in the expansive AI sector. Its latest Xeon 6 processors with Performance-cores (P-Cores) can support large AI workloads across diverse sectors. With industry-leading capabilities in AI processing, the Xeon 6 family delivers the industry’s best CPU for AI at a lower total cost of ownership. Intel's innovative AI solutions are likely to benefit the broader semiconductor ecosystem by driving down costs, improving performance and fostering an open, scalable AI environment.

QCOM’s Price Performance, Valuation and Estimates

Qualcomm shares have declined 0.5% over the past year against the industry’s growth of 54.7%.

Going by the price/earnings ratio, the company's shares currently trade at 14.17 forward earnings, lower than 37.30 for the industry. 

Earnings estimates for 2025 have increased 1.2% to $11.89 per share over the past 60 days, while the same for 2026 have moved up 0.4% to $11.88.

Qualcomm currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research