San Diego, California – After experiencing a significant decline in Qualcomm’s stock price earlier in 2022 due to challenges in the mobile phone market, investors are now beginning to recognize the potential in generative Artificial Intelligence (“AI”) as of the end of 2023. Despite not being the high-flying growth stock it once was, Qualcomm is now seen as offering great value and a significant opportunity for providing chipsets capable of running AI algorithms locally on devices, rather than relying on cloud services. The stock price has been on an upward trend since closing at $103.59 on October 25, 2023, and shows no signs of slowing down.

Investor interest in Qualcomm was further piqued when Cathie Wood and Ark Invest began purchasing the company’s stock for two of their ETFs in early January 2024. Additionally, Citi Research upgraded Qualcomm to a buy rating, with a target price increase to $160 from $110. This positive attention has brought Qualcomm’s attributes to the forefront, resulting in a 63% increase in its closing price by March 27, 2024.

Qualcomm, a leader in wireless technology, has been diversifying into new growth markets beyond wireless, such as Mobile AI chips, advanced automotive technologies, IoT, Edge Computing, Generative AI inferencing server chips, and wearable technology. The company’s focus on AI chips for various applications stems from the need for local data processing for real-time applications, lower power consumption, data privacy, reduced costs, and offline capabilities.

Chief Financial Officer Akash Palkhiwala emphasized the importance of “pervasive AI,” highlighting Qualcomm’s technology capabilities in enabling AI on devices through low-power neural processing engines. This aligns with the company’s vision of embedding AI technologies into everyday products and services, signaling the potential for significant market opportunities.

In the automotive sector, Qualcomm’s Snapdragon Ride product is gaining traction with 75 new models launched in 2023 featuring Qualcomm technologies. The IoT segment, although facing challenges in an uncertain market, is expected to rebound and contribute to Qualcomm’s growth in the future.

Despite its positive outlook, Qualcomm faces risks such as customer concentration in its wireless business and competition from companies like Broadcom and MediaTek. Additionally, potential disputes over patents or business practices could impact the company’s revenue.

In terms of valuation, Qualcomm is not considered a bargain stock, but its forward P/E ratio compared to the sector median suggests that the market may undervalue the stock. Analysts forecast mid-single-digit revenue growth over the next few years, but Qualcomm’s focus on AI processing capabilities could exceed these estimates.

As Qualcomm continues to evolve and capitalize on the generative AI opportunity, the stock remains a solid investment with growth potential. Investors looking for a company with growth prospects in AI technology may find Qualcomm to be a valuable addition to their portfolio, rating it as a buy for its growth at a reasonable price (GARP) potential.