We recently published a list of 10 Undervalued Semiconductor Stocks to Buy According to Analysts. In this article, we are going to take a look at where QUALCOMM Incorporated (NASDAQ:QCOM) stands against other undervalued semiconductor stocks to buy according to analysts.
Global market intelligence firm IDC, in its most recent report, projected a 15% growth for the global semiconductor market in 2025, driven by the relentless rise in demand for artificial intelligence (AI) and high-performance computing (HPC). According to their analysts, this surge will be fueled by forthcoming upgrades in key application markets, notably cloud data centers. Further emphasizing the industry’s promising growth outlook, Nicolas Gaudois, head of Asia-Pacific technology research at UBS, stated in a recent CNBC interview that AI-compute will continue to underpin growth in 2025. He observed:
“The 21% growth in the semiconductor market was mostly driven by AI-compute demand while non-AI growth actually declined. In 2025, AI would remain the growth driver with 40% growth but we expect non-AI portion to also grow by 17% due to several factors such as autos and industrial markets growth improving, restocking (customers buying for their inventories) in those markets and also increase in semiconductor content in devices to support edge (on-device) AI.”
Nicolas also suggested that GPU chipmakers and foundries will remain the main beneficiaries of AI demand and will make the most money from it. With the semiconductor space ripe for further growth, we have picked 10 semiconductor stocks that are undervalued and are best placed to benefit from this growth.
Our Methodology
To identify the 10 undervalued semiconductor stocks, we carried out thorough research and used stock screeners to compile a list of U.S.-listed companies. Our criteria included a market capitalization of over $2 billion, an expected share price upside of at least 10%, and a Forward PE ratio below 30x. Ultimately, the stocks were ranked in ascending order of their upside potential. These stocks are also popular among elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician testing the latest 5G device, demonstrating the company’s commitment to innovation.
QUALCOMM Incorporated (NASDAQ:QCOM)
Upside Potential: 17%
Fwd. PE: 15.0
Next on our list is QUALCOMM Incorporated (NASDAQ:QCOM), a fabless semiconductor company specializing in software, semiconductor designs, patented intellectual property, development tools, and services for the wireless communication industry. The company boasts an extensive portfolio of patents crucial to 5G, 4G, CDMA, and other mobile communications standards, driving significant licensing revenue growth. With approximately 160,000 granted and pending patents across over 100 countries, QUALCOMM (NASDAQ:QCOM) holds a strong intellectual property position.
QUALCOMM Incorporated (NASDAQ:QCOM) envisions a $900 billion addressable market and aims to be present in over 50 billion devices by 2030, as outlined in its November 2024 Investor Day presentation. While we cannot comment on the speculations surrounding QUALCOMM (NASDAQ:QCOM)’s potential acquisition of Intel, it is noteworthy that the company ended the latest financial year with over $13 billion in cash and equivalents. This robust financial position, coupled with substantial annual cash flow, enables QUALCOMM (NASDAQ:QCOM) to pursue strategic inorganic growth opportunities. The stock currently trades at a P/E ratio of 15.0x.
The company is slated to report its next quarterly earnings on February 5, 2025. Anticipating a strong quarter, an analyst from JP Morgan has already placed the stock on ‘Positive Catalyst Watch’. The analyst believes QUALCOMM Incorporated (NASDAQ:QCOM)’s smartphone market will benefit from government subsidies in China. Additionally, the company’s strategic partnership with Samsung is expected to drive further market share gains.
Overall, QCOM ranks 7th on our list of undervalued semiconductor stocks to buy according to analysts. While we acknowledge the potential of QCOM to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than QCOM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
