Why Bernstein Still Sees Value in Qualcomm (QCOM) Despite Smartphone Fears

QUALCOMM Incorporated (NASDAQ:QCOM) is one of the 10 AI Stocks Analysts Are Watching. On February 2, Bernstein SocGen Group analyst Stacy Rasgon lowered the price target on the stock to $200.00 (from $215.00) while maintaining an “Outperform” rating. Despite certain risks, the firm is constructively positive on the stock driven by a developing undervalued growth narrative.

Bernstein noted how the QCOM shares have lagged in recent months due to factors such as a general distaste of smartphones, AAPL roll off, and recent dynamics in the memory market. While the demand for smartphones has been fine, investors remain cautious about the forward outlook.

Despite these concerns, the firm believes QCOM may be more insulated due to its over-indexing to the higher-end segment, even though it is not necessarily immune to broader industry headwinds.

The firm further added that as Apple-related revenues diminish over time, QCOM’s strong product portfolio, growing adjacencies, and an emerging AI story will allow the company’s underlying strength to become more visible.

QCOM’s current valuation is at less than 13x forward earnings, representing an estimated 44% discount to the S&P 500 and a 56% discount to the Philadelphia Semiconductor Index (SOX). This implies potential value despite concerns about the company operating in out-of-favor market segments.

“We get that the stock plays in out-of-favor areas, numbers might be too high, etc. But we still think the story is worth a look as the narrative grows cleaner through the year. We lower our PT to $200 to reflect lower estimates, but maintain our Outperform rating.”

QUALCOMM Incorporated (NASDAQ:QCOM) develops wireless technologies, supplies chips for mobile, automotive, and IoT, licenses patents, and invests in emerging tech.

While we acknowledge the potential of QCOM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.