QCOM Betting Big on AI PC: Will it Deliver Sustainable Growth?

Qualcomm Incorporated QCOM has been steadily diversifying its product suite to unlock new revenue-generating opportunities. Such efforts increase resilience in its business model by making QCOM less vulnerable to one particular sector. It is 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 Elite and Snapdragon X Plus are gaining solid market traction. Its X series chips, powered by cutting-edge Oryon CPU, Hexagon NPU and Adreno GPU, are optimized for Copilot+PCs. The advanced AI effectively boosts functionalities of audio, camera and various other productivity tools. 

AI is reshaping workplace efficiency. Enterprises across industries are utilizing AI for workflow automation and free up employees for more complicated work. Per a PWC report, industries more exposed to AI witnessed significant growth in AI per employee. AI has become a major productivity engine and enterprises are incorporating AI PCs for several applications across R&D, marketing, finance and customer-service processes. 

Amid this backdrop, Qualcomm Snapdragon X Series, which offers game-changing efficiency with leading-edge AI, seamless user experience, is gaining solid momentum. Several leading original equipment manufacturers, such as Dell, HP, Lenovo and ASUS, are incorporating Qualcomm chips. Per Global Market Insights market of AI PC is projected to grow at a 42.8% compound annual growth rate between 2025 to 2034. Qualcomm’s expanding AI PC chipset offerings will likely gain from this emerging market trend.

How Are Competitors Faring?

In the AI PC vertical, the company faces competition from Intel Corporation INTC and Advanced Micro Devices AMD.

Intel Core Ultra 200V series processors are witnessing healthy demand in the AI PC market. With strong x86 compatibility NPU, which enables power-efficient AI acceleration, superior GPU and CPU capabilities, Intel AI PC chips are unlocking an endless new wave of AI experiences. The company remains firmly on track to ship more than 100 million by 2025.

AMD’s new Ryzen AI Max, AI 300 and 200 Series processors are transforming AI PC capabilities with superior performance. With strong AI computing and integrated graphics, AMD chips are benefiting from strong industry-wide adoption. Its state-of-the-art AMD Ryzen AI 9 HX 375 can pose a major challenge to Qualcomm Snapdragon X series chips.

QCOM’s Price Performance, Valuation and Estimates

QCOM’s shares have declined 23.9% over the past year against the industry’s growth of 14.8%.

Going by the price/earnings ratio, the company's shares currently trade at 13.41 forward earnings, lower than 33.07 for the industry and the stock’s mean of 17.24.

Earnings estimates for 2025 and 2026 have decreased 0.17% to $11.71 and 2.23% to $11.82 per share, respectively, over the past 60 days.

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

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

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