We recently published a list of 10 Best Affordable Tech Stocks To Invest In Now. In this article, we are going to take a look at where QUALCOMM Incorporated (NASDAQ:QCOM) stands against the other best affordable tech stocks to invest in now.
What’s Happening in the Technology Sector?
The US tech stocks have recently faced significant pressure, contributing to a decline in major stock indexes amid ongoing discussions about tariffs. Semiconductors is one of the segments facing a downturn. Jeff deGraaf, Renaissance Macro Research chairman, joined CNBC on November 17 to talk about the state of semiconductors. deGraaf thinks that the rally as it stands today is somewhat overbought internally. This means that while the overall market may be experiencing upward movement, there are underlying signs that it may not be sustainable. An overbought condition typically indicates that asset prices have risen too quickly and may be due for a correction. However, deGraaf also mentioned that the current market is a trend market, not a momentum market, which suggests price movements are driven by broader economic trends and fundamental factors rather than short-term speculative trading. He notes that after the recent elections, there was no significant change in market momentum. This stability reinforces his view that the market has achieved escape velocity, indicating that it is positioned to continue its upward trend despite potential challenges.
READ ALSO: 10 Best Small-Cap Stocks Ready To Explode and 10 Cheap NASDAQ Stocks To Invest In Now.
He mentioned that the market is still tilted towards cyclical rather than defensive stocks. However, the situation is tricky as semiconductors are experiencing a downturn, which is a huge cyclical industry group. While the semiconductors have been down the software sector has been up on a relative basis. deGraaf noted that he wants to rotate out semiconductors broadly. While elaborating further he mentioned that his statement is based on relative performance, which is very crucial from an investment perspective. He added that except for a few names the semis have the worst momentum and long-term trend strength in the broad market. deGraaf pointed out that NVIDIA has been an exception to its group let alone the greater market, and for that reason, he also wants to avoid the semiconductor giant and rotate out of semis broadly.
Lastly, he pointed out the software group, saying that a lot of software names are improving and he thinks it makes sense to reallocate dollars to software companies as they have some good momentum.
Moreover, in one of our recent pieces, titled “10 Most Promising New Technology Stocks According to Hedge Funds“, we discussed how AI application across various sectors is expected to boost technology IPOs during the year. Here’s an excerpt from the article:
After a prolonged slump, the technology IPO is experiencing a revival in 2024, particularly among companies leveraging artificial intelligence. According to a July 10 report by Morgan Stanley, the firm’s bankers predict to see at least 10 to 15 tech IPOs this year, driven by the growing interest in AI applications across various sectors, especially within technology and healthcare.
According to Colin Stewart, Morgan Stanley’s Global Head of Technology Equity Capital Markets, understanding a company’s role in the evolving AI landscape is crucial for its attractiveness to investors. Companies that demonstrate how AI can transform enterprise operations or customer interactions are more likely to succeed in going public.
The past few years saw a significant decline in IPO activity due to high interest rates and lower company valuations. Many tech firms opted to delay their offerings as capital became more expensive. However, as the market adjusts to these higher rates, companies are realizing they cannot postpone their IPOs indefinitely. The need for liquidity and public financing is prompting many large private firms to consider going public again.
AI has been a revolutionary addition to the healthcare segment as well. Companies are increasingly focused on harnessing vast amounts of data to drive improvements in patient care and medical research. By developing systems that can analyze complex datasets such as electronic health records, imaging data, and genomic information. These firms are positioning themselves as essential players in the healthcare ecosystem. The ability to generate proprietary datasets that power AI applications is becoming a key factor in attracting investor interest.
A technician testing the latest 5G device, demonstrating the company’s commitment to innovation.
Our Methodology
To compile the list of the 10 best affordable tech stocks to invest in now, we used the Finviz stock screener, Yahoo Finance, and Seeking Alpha. Using the screener we shortlisted technology stocks trading below the Forward P/E of 15 and whose earnings are expected to grow during the year. Next, we sorted our initial list by market capitalization and cross-checked the Forward P/E of each stock from Seeking Alpha and earnings growth from Yahoo Finance. Lastly, we ranked the stocks in ascending order of the number of hedge fund holders as per Insider Monkey’s database for Q3 2024.
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)
Forward P/E Ratio: 14.02
Earnings Growth This Year: 9.52%
Number of Hedge Fund Holders: 74
QUALCOMM Incorporated (NASDAQ:QCOM) is a leading technology company that focuses on developing essential technologies for wireless communication. The company not only designs and manufactures integrated circuits and software that are crucial for various smartphones and smart devices. They also work on advanced technologies for cars, such as automated driving systems. It also holds numerous patents related to wireless technology. The company operates through three main segments including Qualcomm CDMA Technologies, Qualcomm Technology Licensing, and Qualcomm Strategic Initiatives.
QUALCOMM Incorporated (NASDAQ:QCOM) is a leading player in the smartphone industry, with its Snapdragon X75 modem being used in the new iPhone 16 models. It also powers the South Korean smartphone giant, Samsung with Snapdragon processors to power its generative AI-enabled Galaxy smartphones. During the fourth quarter results for fiscal 2024, the company reported its QCT segment revenue which deals with handsets improved more than 9% year-over-year to reach $33.2 billion. Within this segment handsets revenue accounted for $6.1 billion, mainly driven by its recent Snapdragon 8 Elite chipset.
While the current growth is impressive for the company, what’s more impressive is its nealine growth prospects. Samsung is expected to launch its next-generation Galaxy S25 during the start of next year, the phones are reported to be powered by Snapdragon 8 Elite, indicating robust growth for the company. Moreover, other smartphone OEMs ASUS, Honor, OnePlus, and OPPO to name a few are also launching devices powered by the same chipset. Looking ahead management expects its first-quarter revenue for fiscal 2025 to be around $10.5 billion and $11.3 billion. It is one of the best affordable tech stocks to invest in now.
Madison Sustainable Equity Fund stated the following regarding QUALCOMM Incorporated (NASDAQ:QCOM) in its Q3 2024 investor letter:
“Alphabet Inc., Eli Lilly and Company, QUALCOMM Incorporated (NASDAQ:QCOM), Microsoft Corporation, and Apple Inc. were the largest detractors. Qualcomm has given back some of its first half gains after the CFO commented at a conference that its entrance into the AI PC business would take time to ramp. We continue to see Qualcomm as well positioned with growth from AI moving into the mobile phone, from new opportunities in the Internet of Things (IoT), and within the Auto industry but will also look to future growth as they enter the PC market.”
Overall, QCOM ranks 2nd on our list of best affordable tech stocks to invest in now. 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.
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Disclosure: None. This article is originally published at Insider Monkey.
