TLDR:
- Nvidia has been a major player in the AI chip space, but Qualcomm might be a better option for investors.
- Qualcomm has developed AI-capable chips for smartphones and is well-positioned for growth in the AI sector.
In the world of artificial intelligence (AI), Nvidia has been a dominant player with triple-digit revenue and earnings growth. However, as investors begin to question the sustainability of Nvidia’s growth due to high valuation and rising competition, Qualcomm emerges as a viable alternative. Qualcomm’s focus on AI-capable chips for smartphones, particularly with the development of Snapdragon 8 Gen 3 chip, showcases its commitment to innovation in the industry.
Qualcomm’s strategic pivot into the Internet of Things and automotive sectors has contributed to its revenue growth, with 27% of revenue in the third quarter of fiscal 2024 coming from these areas. The company’s revenue growth is showing signs of ramping up again, with a 6% increase reported for the first nine months of fiscal 2024 and a 11% growth rate in the most recent quarter. Additionally, Qualcomm has managed to maintain a lower P/E ratio compared to other semiconductor companies, making it an attractive investment option for those looking to capitalize on the AI market.
Overall, Qualcomm’s continued innovation in the AI space, particularly in smartphone chipsets, and its expansion into new growth areas like automotive, position the company well for future growth. With a lower earnings multiple and a strong focus on AI-enabled smartphones, Qualcomm stock presents a compelling opportunity for investors looking to tap into the growing AI market.