Qualcomm vs. AMD: Which Chipmaker Offers Stronger Growth in 2025?

Qualcomm Technologies Inc. QCOM and Advanced Micro Devices, Inc. AMD are premier chip manufacturing firms competing in the mobile, PC and data center markets, with a focus on AI (artificial intelligence) and advanced chip technologies. Qualcomm’s offering includes high-performance, low-power chip designs for mobile devices, PCs, XR (Extended Reality), automotive, wearable, robotics, connectivity and AI use cases. The company boasts a comprehensive intellectual property portfolio comprising 3G, 4G, 5G and other technologies.

Advanced Micro has strengthened its position in the semiconductor market, thanks to its evolution from a purebred consumer-PC chip provider to an enterprise-focused company. Its processors are primarily powered by the company's proprietary "Zen" CPU and "Vega" GPU architectures. The company’s acquisition of Xilinx has helped in expanding into multiple embedded markets. AMD now offers Field Programmable Gate Arrays (FPGAs), Adaptive SoCs and Adaptive Compute Acceleration Platform (ACAP) products. 

With growing AI proliferation in PCs, smartphones, automotive and IoT applications, both Qualcomm and Advanced Micro are steadily advancing their semiconductor portfolio to bolster their competitive edge. Let us analyze in depth the competitive strengths and weaknesses of the companies to understand who is in a better position to maximize gains from the emerging market trends.

The Case for Qualcomm

Qualcomm is well-positioned to meet its long-term revenue targets driven by solid 5G traction, greater visibility and a diversified revenue stream. The company is increasingly focusing on the seamless transition from a wireless communications firm for the mobile industry to a connected processor company for the intelligent edge. The recent introduction of Qualcomm X85 5G Modem-RF, powered by Qualcomm’s 5G AI Processor, has taken the market by storm by delivering one of the fastest, battery efficient and consistent 5G connectivity to Android users.  

The company is strengthening its foothold in the mobile chipsets market with innovative product launches. It had extended its Snapdragon G Series portfolio with the addition of next-generation gaming chipsets, Snapdragon G3 Gen 3, Snapdragon G2 Gen 2 and Snapdragon G1 Gen 2 chips. Qualcomm is also placing strong emphasis on developing advanced chipsets for the emerging market of AI PCs. The strategy is aimed at moving beyond the slowing smartphone industry, which is its primary breadwinner. The Snapdragon X chip for mid-range AI desktops and laptops is the fourth such product in the Snapdragon X processor line, following the successful launch of the Snapdragon X Plus 8-core, Snapdragon X Plus and Snapdragon X Elite series.

Despite efforts to ramp up its AI initiatives, Qualcomm has been facing tough competition from Intel Corporation INTC in the AI PC market. Shift in the share among original equipment manufacturers (OEMs) at the premium tier has reduced Qualcomm's near-term opportunity to sell integrated chipsets from the Snapdragon platform. The company is also facing stiff competition from Samsung’s Exynos processors in the premium smartphone market, while MediaTek is gaining market share in the mid-range and budget smartphone market. Competition is also likely to come from formidable rivals like Broadcom and NVIDIA Corporation NVDA. Qualcomm’s extensive operations in China are further likely to be significantly affected by the U.S.-China trade hostilities.

The Case for Advanced Micro

AMD is strengthening its footprint in the AI market through an expanding portfolio. The latest MI300 series accelerator family boosts its competitive position in the generative AI space. The accelerator is based on AMD CDNA 3 accelerator architecture and supports up to 192 GB of HBM3 memory, enabling efficient running of large language model training (up to 80 billion parameters) and inference for generative AI workloads. It is also benefiting from strong enterprise adoption and expanded cloud deployments.

In addition, strength in 7-nanometer-based processors is expected to strengthen the company's competitive position in the commercial and server market against Intel. AMD is currently leveraging Taiwan Semiconductor Manufacturing Company's 7 nm process technology, which is enabling it to deliver its advanced 7 nm chips faster to market. AMD Radeon RX 7900 series chiplet design combines 5 nm and 6 nm process nodes, each optimized for specific chips in the GPU.

However, in the traditional computing market, which still generates a chunk of its revenues, AMD is up against Intel's strong market position. With Intel systems so well entrenched, there is an obvious preference for system integrators to choose Intel processors over AMD. Moreover, AMD faces significant competition from NVIDIA in the GPU market. AMD has had relatively greater success in the mobile segment, and its current product lineup indicates that this focus will continue. However, competition in the mobile segment is likely to accelerate, with more ARM-based devices coming on the market.

How Do Zacks Estimates Compare for QCOM & AMD?

The Zacks Consensus Estimate for Qualcomm’s 2025 sales and EPS implies year-over-year growth of 11.8% and 14.6%, respectively. The EPS estimates have been trending southward on average over the past 60 days.

The Zacks Consensus Estimate for Advanced Micro’s 2025 sales suggests year-over-year growth of 23.1%, while that for EPS implies a rise of 18.4%. The EPS estimates have been trending southward over the past 60 days.

Price Performance & Valuation of QCOM & AMD

Over the past year, Qualcomm has declined 27.7% against the industry’s growth of 12.5%. Advanced Micro has lost 21.5% over the same period.

Qualcomm looks more attractive than Advanced Micro from a valuation standpoint. Going by the price/earnings ratio, Qualcomm’s shares currently trade at 12.95 forward earnings, significantly lower than 26.72 for Advanced Micro.
 

QCOM or AMD: Which is a Better Pick?

Qualcomm and Advanced Micro carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Both companies expect their sales and profits to improve in 2025. Advanced Micro has shown steady revenue and EPS growth for years, while Qualcomm has been facing a bumpy road. With a better price performance and healthy long-term earnings growth expectations of 24.5%, Advanced Micro is relatively better placed than Qualcomm (long-term earnings growth expectations of 8.2%), although the former is a bit expensive in terms of valuation. Consequently, Advanced Micro seems to be a better investment option at the moment.

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

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