Qualcomm: A Chip with Potential (and a Temporary Headache)

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Right. So, you’re contemplating the acquisition of semiconductor equities. Excellent. A perfectly sensible thing to do, given the current, shall we say, enthusiasm for artificial intelligence. But before you rush headlong into the usual suspects – the Nvidias and Broadcoms of this world – allow me to suggest a slightly less… obvious contender. It’s not that those larger firms are bad, you understand. It’s just that their valuations currently resemble the trajectory of a particularly ambitious space probe – heading rapidly away from anything resembling a reasonable entry point. (One suspects a significant portion of their market capitalization is currently based on the optimistic assumption that we will all soon be replaced by benevolent AI overlords. A perfectly valid assumption, naturally, but not one necessarily conducive to immediate returns.)

Enter Qualcomm (QCOM 0.01%). Now, Qualcomm isn’t immune to the general air of technological frenzy, but it’s currently trading at a price that suggests someone, somewhere, has briefly remembered the concept of value. It’s a bit like finding a perfectly good towel at a space station gift shop – unexpectedly reasonable.

The Curious Case of AI and Memory

The present situation, you see, is… complicated. Qualcomm, for the vast majority of its revenue, relies on the sale of chips that go into those little rectangles everyone stares at all day. (These ‘smartphones’, as they’re inexplicably called, seem to have become rather important. One wonders if future archaeologists will deduce that our civilization worshipped them.) Unfortunately, the cost of memory chips – those tiny silicon wafers that hold all the data – has recently gone a bit… enthusiastic.

This isn’t a simple supply-and-demand issue, oh no. It’s that everyone building these AI systems needs lots of memory. It’s like trying to build a sandcastle with only teaspoons. The more ambitious the castle, the more teaspoons you require. And the teaspoons, naturally, are becoming increasingly expensive. Micron, the memory chip manufacturer, anticipates this shortage will persist well into 2026. Which means Qualcomm, for the foreseeable future, might experience a slight…revenue deceleration. (A ‘deceleration’ being a polite term for ‘things might not grow quite as quickly as we hoped’.) Management is forecasting a 3.5% year-over-year decline in revenue. A minor setback, really, when considered against the backdrop of universal entropy.

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However – and this is where things get interesting – Qualcomm isn’t simply content to remain a purveyor of smartphone chips. They’re diversifying. Their automotive segment is showing promise. Their Internet of Things (IoT) business is, well, existing. (Which, in the grand scheme of things, is a perfectly respectable achievement.) And they’re even attempting to crack the data center chip market with a pair of AI inference chips. (An ‘inference chip’ being a device that attempts to deduce meaning from data. A surprisingly difficult task, even for silicon.)

The long-term play, though, is where Qualcomm truly shines. As AI moves from being confined to vast server farms to running on devices themselves – your phones, your cars, your toaster ovens – Qualcomm is ideally positioned. Their Snapdragon processors are already rather good at what they do. And on-device AI will likely drive demand for more high-end devices. (Because everyone needs a toaster oven that can accurately predict the weather, naturally.)

Importantly, management seems to think this smartphone slowdown is temporary. They’re sticking to their 2029 revenue outlook. Which suggests they haven’t entirely lost their minds. The stock price has taken a bit of a haircut, which, while unpleasant, presents a potential opportunity. At under $140 per share, you’re paying only 12 times forward earnings. (A remarkably reasonable price for a company attempting to navigate the complexities of artificial intelligence, quantum computing, and the inevitable robot uprising.) And those earnings should see meaningful growth once this temporary smartphone headwind subsides. It’s not a guaranteed win, of course. But then again, very little in this universe is.

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2026-02-11 17:32