We recently compiled a list of the Top 10 Undervalued Tech Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where QUALCOMM Incorporated (NASDAQ:QCOM) stands against other top undervalued tech stocks to buy according to hedge funds.
Artificial intelligence was the dominant story in the tech market in 2024, driving significant gains in tech stocks. The rapid advancements in AI have been a catalyst for business value, which has been reflected in the stock market performance of companies directly involved in this technology. Another major driver of the outperformers was the crypto industry. The launch of spot bitcoin exchange-traded funds in January 2024 marked the beginning of a big year for cryptocurrencies, which was further bolstered by Donald Trump’s election victory in November.
However, on January 13, CNBC reported that major tech stocks faced pressure, as the specter of higher inflation drove up Treasury yields and dampened expectations for potential Federal Reserve rate cuts this year. Higher yields increase the cost of capital and can lower both consumer spending and corporate investment. The sell-off in tech stocks extended beyond the megacap tech giants, with quantum computing stocks seeing significant drops. The broader market was also affected, with the S&P 500 and Nasdaq Composite each dropping more than 1%, following a hotter-than-expected jobs report and rising inflation expectations among consumers.
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In an interview with CNBC on January 13, Daniel Ives, Global Head of Technology Research at Wedbush Securities, discussed the current state and future prospects of the tech sector, particularly in the context of rising interest rates and a strong dollar. Ives highlighted that the bull market in tech is only halfway through. He argued that strong consumer demand and capital expenditures (CapEx) in artificial intelligence (AI) are driving the sector’s growth, making market dips opportunities to invest in tech stocks. Ives believes that the fundamental strength of tech companies, especially in AI, will continue to drive positive performance and suggests a diversified approach to investing in tech. Ives also discussed the broader market dynamics, including the potential for the Federal Reserve to remain hawkish at its next meeting. He views the current environment as an opportunity to own the winners in the tech sector.
The technology sector continues to offer compelling opportunities for investors seeking value and long-term growth. As the market fluctuates, undervalued stocks offer a critical strategy for maximizing returns.
An aerial view of a bustling semiconductor production zone showcasing the company’s integrated circuits.
Our Methodology
To compile our list of the top 10 undervalued tech stocks to buy according to hedge funds, we used Finviz and Yahoo stock screeners to find the 40 largest technology companies trading below the forward P/E ratio of 15 as of January 13. We then used Insider Monkey’s Hedge Fund database to rank 10 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? 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).
QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Investors: 74
Forward P/E Ratio as of January 13: 13.79
QUALCOMM Incorporated (NASDAQ:QCOM) is a global leader in wireless technology and semiconductor solutions, with a focus on mobile devices, automotive, and IoT. The company generates revenue through chipset sales and licensing fees for its intellectual property.
QUALCOMM Incorporated (NASDAQ:QCOM) is focusing on capitalizing on the growing demand for on-device artificial intelligence (AI) and edge computing. The company recognizes the transformative potential of edge AI in enhancing the human-computer interface to provide context, immediacy, and personalization while ensuring privacy and security. At the recent Snapdragon Summit, QUALCOMM Incorporated (NASDAQ:QCOM) showcased its vision for AI-enabled edge computing and announced partnerships with Meta to support Llama 3.2 on Snapdragon-powered devices and with Amazon to create a cloud-to-edge solution for customizing and deploying AI models. The company also introduced the Snapdragon 8 Elite, which features a second-generation custom Oryon CPU and a newly architected hexagon NPU to deliver cutting-edge AI capabilities in mobile devices.
Additionally, QUALCOMM Incorporated (NASDAQ:QCOM) is also expanding its presence in the Industrial IoT (IIoT) market with the launch of the Qualcomm IQ Series and the IoT Solutions Framework. These offerings are designed to meet the needs of next-generation industrial edge applications to provide solutions for inspection, automation, robotics, and advanced computer vision. The company has integrated connectivity and computing power in its Networking Pro A7 Elite Platform, which aims to further enhance the company’s capabilities in edge networking.
Overall QCOM ranks 2nd on our list of top undervalued tech stocks to buy according to hedge funds. 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.
