3 Reasons to Love This Underperforming Chipmaker

Key Points

• Qualcomm's shares have traded sideways since July but have been up 10% since December.
• They delivered a strong earnings beat in December, with record revenue and bullish guidance.
• Benchmark, Piper Sandler, and Rosenblatt Securities reaffirmed Buy ratings last week, with price targets pointing to significant upside.

Shares of tech giant Qualcomm Inc. NASDAQ: QCOM have been stuck in a holding pattern for months, but recent signs point to a shift in momentum. After a largely sideways trend since July, the stock has gained 10% since December. Despite this, it remains well below its all-time high from last June, presenting a compelling opportunity for investors looking to position themselves ahead of the next leg higher.

The semiconductor industry remains one of the most attractive spaces in the market, with AI, 5G, and automotive technology serving as major catalysts for growth. Qualcomm’s recent earnings report, which featured a record revenue print and bullish guidance, suggests the company is well-positioned to capitalize on these trends. Combine that with a fresh wave of analyst support, and it becomes clear why this underperforming chipmaker might be gearing up for a breakout.

Record Revenue Prints

Qualcomm delivered an impressive earnings report last week, beating expectations across the board. The company posted record-breaking revenue while exceeding EPS forecasts, reinforcing its ability to maintain profitability despite macroeconomic uncertainty. Management’s forward guidance was equally strong, signaling confidence in sustained growth throughout 2025.

CEO Cristiano Amon highlighted Qualcomm’s growing presence in AI-driven mobile computing, 5G expansion, and automotive chip production. These segments are expected to drive long-term revenue growth, particularly as demand for AI-powered devices and advanced connectivity solutions continues to surge.

Despite challenges from pricing pressures and global supply chain constraints, Qualcomm’s performance has remained resilient, positioning it as a leader in these high-growth markets.

Exciting Analyst Updates

Wall Street analysts are beginning to take notice of Qualcomm’s improving fundamentals. Last week, Benchmark reiterated its Buy rating with a $240 price target, which represents a 42% upside from the stock’s current price. Piper Sandler also maintained its Overweight rating, citing Qualcomm’s dominant position in AI-powered mobile chip technology as a key advantage. Rosenblatt Securities also joined the bullish camp, reaffirming its Buy rating and pointing to Qualcomm’s leadership in 5G and automotive chip production as long-term growth drivers.

These endorsements suggest that Qualcomm’s recent underperformance is unlikely to last. With multiple analysts forecasting strong upside potential, the stock could be positioned for a breakout as market sentiment shifts in its favor.

Potential Risks To Consider

However, not all analysts are fully convinced that Qualcomm is a buy at current levels. Evercore ISI and Cantor Fitzgerald both rated the stock as Neutral last week, citing concerns over valuation and margin sustainability. While Qualcomm has consistently delivered strong financial results, questions remain about its ability to maintain this momentum in an increasingly competitive semiconductor market.

Competition from NVIDIA Corp NASDAQ: NVDA and Advanced Micro Devices Inc NASDAQ: AMD is another factor that could weigh on Qualcomm’s growth prospects. Both companies are aggressively expanding their AI-focused product offerings, creating a more challenging landscape. However, Qualcomm’s unique positioning in mobile, automotive, and connectivity chips helps differentiate it from these rivals, mitigating some of the competitive risks.

Attractive Technical Setup

From a technical standpoint, Qualcomm’s stock appears to be building strength. The RSI sits at 51, indicating bullish momentum with plenty of room to run before the stock reaches overbought levels. The recent 10% rally since December suggests that buyers are beginning to step in, creating a strong foundation for further upside. With shares still well below their all-time highs, investors have a compelling entry point before the stock potentially makes a move higher.

For those looking to gain exposure to a high-quality semiconductor company with a strong long-term outlook, Qualcomm offers an attractive risk-reward setup. If the broader chip sector continues to perform well and analysts’ bullish projections materialize, the stock could be trading well above $200 in the coming months.