Qualcomm, the cheapest AI concept stock?

Qualcomm, the cheapest AI concept stock?

Against the backdrop of a general surge in AI chip stocks, Qualcomm’s “cost-effectiveness” has successfully caught Wall Street’s attention.

According to news from Chasewind Trading Desk, a research report published by J.P. Morgan on November 10 revealed that, after meeting with Akash Palkhiwala, Qualcomm’s CFO and COO, and other executives, the bank maintained its overweight rating on Qualcomm and believes the company may be “the least expensive AI semis company.”

Analyst Samik Chatterjee stated in the report that, considering Qualcomm’s strong growth momentum in diversified markets, the continued penetration of AI into various end-markets, and the emerging data center opportunities, the growth momentum of its new businesses is expected to exceed the company’s average level over the past five years.

Data Centers: Focusing on Power Consumption and Memory Bandwidth Challenges

According to the research report, Qualcomm’s management indicated that the company’s data center strategy is primarily focused on solving power and memory-related challenges. Qualcomm believes its per-watt performance advantage, already validated in edge devices like smartphones and PCs, can be extended to the data center market—especially as power efficiency becomes increasingly important in AI applications.

To achieve this goal, Qualcomm plans to launch two key products: the AI 200 chip (expected to launch by the end of 2026), designed to provide high energy-efficient performance; and the AI 250 chip, which targets both power and memory bandwidth challenges.

Management reiterated that data center revenue is expected to begin growing in the 2027 fiscal year, first driven by AI accelerators/NPUs, followed by CPU-related revenue in 2028 fiscal year, together creating a “multi-billion dollar” business opportunity in just a few years.

The only known client, HUMAIN, is expected to start deployment from the end of 2026. Additionally, Qualcomm is in contact with several hyperscale cloud service providers regarding CPU and NPU products.

Automotive and PC Business: Surpassing Expectations, AI Becomes a New Highlight

Currently, Qualcomm’s diversification strategy has yielded results. According to the report, in the past five years, its automotive and IoT business annual compound growth rate (CAGR) exceeded 20%.

  • Automotive business: The growth rate of chip design orders has surpassed internal expectations. The ADAS (Advanced Driver-Assistance Systems) solution co-developed with BMW has already been launched on Neue Klasse platform models in Europe and is expected to debut in the U.S. in Q1 2026, and later be rolled out to 130 countries. This not only solidifies Qualcomm’s leadership in digital cockpit, connectivity, and ADAS areas, but also brings additional revenue potential for its ADAS software stack.
  • PC business: Qualcomm is steadily progressing towards its PC market targets. Retail channels in the U.S. and Western Europe currently account for nearly 10% market share, with a long-term goal of achieving $4 billion in PC revenue (equivalent to 12% of global market share) by FY2029.
  • XR business: This sector is seen as having the greatest upside potential relative to the 2024 Analyst Day targets. As the market shifts from VR/AR devices to AI smart glasses, Qualcomm has the opportunity to “far exceed” its previously set $2 billion revenue goal for FY2029.

Meanwhile, Qualcomm’s traditional strength—smartphone business—remains solid. The report notes that robust demand for high-end smartphones continues to drive revenue growth in the non-Apple segment. This solid foundation provides strong financial support for the company's expansion into new areas.

The Next Catalyst: Data Center Investor Day?

J.P. Morgan concluded in the report that, given the strong performance of AI-related companies over the past 18 months, Qualcomm might be the “cheapest semiconductor company” for investors to leverage the AI trend.

However, the report also clearly reminds investors that patience is required. Significant growth in data center revenue is only expected from FY2027, and the adjustment in business share with Apple will also take time to digest.

According to the report, a potential catalyst may be Qualcomm’s planned Data Center Investor Day in the first half of 2026, at which the company could announce more customer relationships and broader market opportunities.

Overall, J.P. Morgan maintains its “overweight” rating on Qualcomm, optimistic about its long-term technological leadership and diversified growth prospects.

 

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