Qualcomm vs. Nvidia and AMD: The Next Big AI Stock?

Qualcomm (QCOM), well known for its leadership position in mobile and automobile semiconductor products, recently announced its foray into the AI chip industry. Though Nvidia (NVDA) and more recently Advanced Micro Devices (AMD) have led the AI semiconductor space thus far, Qualcomm may be positioning itself in a niche that could propel it to a leading role and put a bid under the stock price.In the last few weeks, Qualcomm announced new efforts to focus on artificial intelligence, with the launch of its AI 200 and AI 250 chips, built specifically for AI inference across both data centers and edge devices. Unlike Nvidia’s GPUs, which dominates AI training, Qualcomm’s chips are optimized for low-power, high-efficiency performance, which is ideal for real-time AI workloads at the edge, including smartphones, vehicles, and IoT systems. Leveraging its leadership in mobile computing, Qualcomm aims to bring advanced on-device AI capabilities to billions of connected devices while also gaining traction in cloud and enterprise inference markets. This dual strategy positions the company as an emerging force in the next phase of the AI hardware race.Qualcomm has long been viewed as a steady, dependable performer, but not particularly exciting. Its lower relative valuation reflects that perception, as investors have typically associated the company with mature, slower growing mobile markets. However, the launch of these new chips could mark a turning point. If these products deliver on their promise of high efficiency and low total cost of ownership, Qualcomm’s growth trajectory may be on the verge of a major inflection point, transforming it from a stable incumbent into a dynamic player in the next phase of the AI boom.Image Source: Zacks Investment ResearchHow Can Qualcomm Become a Leading AI Stock?Qualcomm’s newly launched AI 200 and AI 250 chips mark a significant expansion of the company’s role in artificial intelligence, positioning it as a potential leader in the fast-evolving inference segment. Unlike Nvidia, whose GPUs dominate the market for training large AI models, Qualcomm is targeting inference at scale, both in data centers and at the edge.The company’s new architecture is designed for efficiency and total cost of ownership (TCO), which have quickly become defining challenges for the industry. Current AI infrastructure relies on power hungry GPUs that demand tens of billions in new data center capex each year, along with vast amounts of electricity that the US grid is increasingly unable to supply. Qualcomm’s AI 200 and AI 250 chips directly address this problem by offering dramatically lower energy consumption and higher performance per watt, reducing both hardware and operational costs for data center operators.The AI 200 is engineered for high-density inference workloads, supporting up to 768 GB of LPDDR memory per card, while the AI 250 builds on that foundation with a near memory compute design that delivers up to 10x higher effective bandwidth compared to current GPUs. Together, they provide scalable solutions that bridge the gap between cloud and edge computing and may enable enterprises to deploy advanced AI models without the massive infrastructure burden typical of current systems.Qualcomm’s expertise in low power mobile computing gives it a distinct edge. With AI capabilities already embedded in hundreds of millions of Snapdragon-powered devices, the company is positioned to extend its dominance from smartphones to data centers and distributed edge environments. This edge-to-rack continuity, a unified architecture spanning devices and servers, represents a powerful strategic advantage as AI expands beyond centralized training into real world deployment.In a market where efficiency and scalability are becoming just as important as raw compute power, Qualcomm’s approach could reshape the AI hardware landscape. Rather than trying to out muscle NVIDIA and AMD on performance, Qualcomm is exploring cost, efficiency, energy optimization, and system-level scalability. By focusing on the economics at a time when the industry desperately needs solutions that are sustainable, Qualcomm is carving out a potentially very lucrative niche.QCOM Shares Trade at a Very Reasonable ValuationQualcomm currently trades at a valuation that fairly reflects its established position in the semiconductor industry. As the dominant provider of chips that power the global mobile ecosystem, the company benefits from a durable and profitable business model. However, that core business has matured, and growth has been modest in recent years.The opportunity for multiple expansion lies in Qualcomm’s emerging AI segment. If the company’s new chips gain meaningful traction in the inference and edge computing markets, Qualcomm could transition from a slow growth mobile supplier to a key player in the rapidly expanding AI infrastructure ecosystem.At present, earnings are forecast to grow 6% annually over the next three to five years, while sales are projected to rise 2.6% this year and 1.5% next year. Yet these estimates do not fully capture the potential upside from the AI business, which remains in its very early stages.QCOM trades at 17.7x forward earnings, right in line with its historical median and well below the broader semiconductor industry average. For comparison, AMD trades at 75.5x forward earnings, and NVIDIA trades at 45.8x. This discount suggests that Qualcomm’s AI opportunity is not yet priced into the stock. If its AI products succeed in scaling commercially, investors could see both accelerating top and bottom line growth and multiple expansion, making today’s valuation appear potentially attractive.Image Source: Zacks Investment ResearchQualcomm Stock Breaks out From Bullish Technical PatternIn the chart below, you can see the point at which Qualcomm announced its entry into the AI hardware market. On that day, shares surged more than 11%, reflecting strong investor enthusiasm for the company’s move into this fast growing segment. The stock has since cooled slightly, consolidating its gains over the past few weeks.Notably, Qualcomm’s recent price action has mirrored that of the broader semiconductor sector, which also peaked around the same time. It seems that sector wide weakness likely contributed to QCOM’s temporary pause. However, in Wednesday’s trading session, the stock broke out from a well-formed bull flag pattern, a classic continuation signal. As long as shares hold above the breakout level, the technical setup suggests that higher prices may be imminent, potentially marking the start of QCOM’s next upward leg.Image Source: TradingViewShould Investors Buy Shares in QCOM?Qualcomm currently holds a Zacks Rank #3 (Hold) rating, but earnings estimates have begun to trend higher in recent weeks. As information about the company’s chips circulates more widely among analysts and investors, upward revisions could follow and potentially serve as a catalyst for the stock.Importantly, Qualcomm doesn’t need to dethrone Nvidia or AMD to succeed. Instead, it is establishing its own niche in the AI hardware landscape. With global AI infrastructure investment set to reach record levels, there is likely plenty of room for new entrants to the market, and Qualcomm’s strategy could make it the next beneficiary of AI boom.#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>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 QUALCOMM Incorporated (QCOM): Free Stock Analysis Report Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks