We recently compiled a list of the 10 Most Promising AI Stocks According to Analysts. In this article, we are going to take a look at where QUALCOMM Incorporated (NASDAQ:QCOM) stands against the other promising AI stocks.
The General Outlook for Tech and AI is Positive
While 2024 has been a solid year for defensive stocks and utilities, the technology sector, on the other hand, experienced significant headwinds. However, the general outlook for technology and AI is starting to improve as we near the end of 2024. On October 9, Dominic Rizzo, T. Rowe Price portfolio manager, appeared in an interview on Yahoo Finance to discuss his thesis for the AI industry.
Most investors were disappointed after they failed to generate higher returns for their investments in AI during the second quarter of 2024. While Rizzo expects the theme to prevail for the next few quarters, he suggests that the technology and AI sector is on track to earn better returns, especially companies using artificial intelligence to improve their businesses.
As for the Magnificent Seven, while all companies have distinct business models and offerings, these companies have grown at a 50% to 100% faster rate than the rest of the market, making it reasonable to group them. Overall, Rizzo reiterates that while the group has been under immense pressure, it is well-positioned to leverage AI to its benefit.
Rizzo believes that AI is an innovation that is here to stay rather than a mere disruptive technology, meaning that companies using it to their benefit will most likely perform better than the ones that are not. Therefore, most if not companies have no other option but to direct investments in AI chips and GPUs. He expects the AI chip market to reach $400 billion by 2027.
Jamie Dimon is Not Worried about AI Taking Over Jobs
Technology has been altering the world since humans came into being. On October 8, Jamie Dimon, JPMorgan CEO appeared in an interview on Bloomberg Television where he discussed the role of artificial intelligence, initial public offerings, and the easing cycle by the Fed.
According to Dimon, technology was previously limited to certain regions and countries, but now we have tech centers in almost every part of the world including Berlin, Glasgow, and Edinburgh. According to Dimon, the acceleration in technology is great and he is glad that innovation is taking precedence, especially in Europe.
Speaking of AI, Dimon suggests that artificial intelligence is going to change a lot of things that are common elements of our world. As far as job losses go, technology has always been changing the job market and is mostly responsible for taking away jobs. However, he emphasizes the need to look at the bigger picture.
Overall, Dimon suggests that jobs will likely be more enhanced and researched-oriented. As for sectors like finance, people have been using it to detect fraud and minimize risk already. Similarly, AI has limited a lot of marketing jobs but at the same time, it has left a positive impact on productivity. Dimon shares he is not worried about AI changing the job landscape and that we should focus on re-training and re-educating workers losing their jobs as new technologies keep springing.
Now that we have studied the outlook of the AI industry, let’s take a look at the most promising AI stocks to buy according to analysts.
Our Methodology
To come up with the most promising AI stocks according to analysts, we sifted through multiple ETFs, our own rankings, and similar rankings on the internet. We then ranked the most promising AI stocks based on the Analyst upside as of October 9, 2024. We also included the hedge fund sentiment for each stock. It is to be noted, that we only considered stocks with a market capitalization of over $1 billion, as of October 9, 2024.
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)
Analyst Upside as of October 9, 2024: 26%
Number of Hedge Fund Holders: 100
QUALCOMM Incorporated (NASDAQ:QCOM) is one of the most promising AI stocks to buy now. The semiconductor company produces hybrid AI architecture applicable to most generative AI applications and devices including phones, laptops, XR headsets, cars, and IoT. QUALCOMM Incorporated (NASDAQ:QCOM) engages in the production of AI hardware, AI software, and AI algorithms.
QUALCOMM Incorporated (NASDAQ:QCOM) is one of the largest producers of mobile systems-on-a-chip (SoCs). Speaking of AI, during the fiscal third quarter of 2024, the company launched its Snapdragon X series chips for PCs capable of power efficiency and personalized AI experiences. The launch of these chips positions QUALCOMM as a growing intelligent computing company.
Recently, Honeywell announced that the company is working on the development of an AI multi-modal agent for its mobile devices that will be powered by QUALCOMM’s chips. In addition to that, QUALCOMM Incorporated (NASDAQ:QCOM) announced the launch of its new Networking Elite platform, capable of revolutionizing networking connectivity with Edge AI. Last week, the company also collaborated with STMicroelectronics to develop the next generation of industrial and consumer IoT solutions backed by Edge AI.
Overall, QUALCOMM Incorporated (NASDAQ:QCOM) is well-positioned to exploit the AI wave and become a market leader. As for its supposed Intel acquisition, if it comes through, the company will have access to multiple foundries, allowing it to compete with giants like Taiwan Semiconductor.
Overall QCOM ranks 6th on our list of the most promising AI stocks according to analysts. While we acknowledge the potential of QCOM as an investment, 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.
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Disclosure: None. This article is originally published at Insider Monkey.
