Is Qualcomm Tesla’s Next Rival in Autonomous Driving?

Key Points

• Qualcomm has long lagged its bigger peers despite strong fundamentals, but its latest partnership could shift the narrative.
• Tesla still dominates the autonomous driving conversation, which makes this all the more of an interesting comparison. 
• Coupled with a recent analyst upgrade, favorable valuation, and consistent earnings, this latest update may be what Qualcomm needs to finally get going.

Shares of Qualcomm Inc. NASDAQ: QCOM closed around $160 on Monday, once again running into resistance at a level they have struggled to clear since June.

It is the fourth time in as many months the stock has tested this level, and, compared to many of its peers, the chart is not a flattering one. And for many investors, Qualcomm has been a frustrating name to watch, let alone own.

On paper, it has all the ingredients that should make it a winner. The fundamentals are solid, the company consistently outperforms earnings expectations, and the semiconductor sector it belongs to has rarely been hotter.

Yet compared to the likes of Advanced Micro Devices, Inc. NASDAQ: AMD, Qualcomm’s shares have long underwhelmed, to say the least. However, that dynamic may now be starting to change.

A fresh partnership with BMW is injecting new energy into Qualcomm’s roadmap and has investors wondering: could Qualcomm be Tesla’s next rival in autonomous driving?

Tesla’s Lead and Its Limits

Tesla Inc. NASDAQ: TSLA has long been synonymous with hands-free driving. Its Autopilot and Full Self Driving systems, along with Elon Musk’s promises of a fully scaled Robotaxi fleet, have kept the company at the center of the autonomy debate. Over the summer, Tesla shares surged in line with those lofty expectations, but as we head into the fall, there are cracks showing.

The stock is still in an uptrend but, like Qualcomm, is struggling to break through a critical ceiling. Resistance around $360 has proven stubborn, with Tesla shares having been turned back there several times this year. That is a dangerous place to be for a company still valued at nearly 200x earnings.

For investors looking to get some exposure to the autonomous driving space but who don’t like to pay that kind of premium, Qualcomm looks far more attractive at just 15x earnings.

Qualcomm’s Auto Ambitions in Full View

The catalyst here is Qualcomm’s deepening push into automotive technology, highlighted by last week’s news of a partnership with BMW. Together, the two companies introduced the Snapdragon Ride Pilot system, a Level 2+ driver-assistance platform designed to deliver hands-free highway driving, automated lane changes, and AI-supported parking.

Unlike Tesla, which integrates its system into its own cars, Qualcomm is positioning itself as the arms dealer of autonomy. By supplying the chips, software, and platform to legacy automakers, it is enabling Tesla’s rivals to bring Tesla-like capabilities to market. The system has already been validated across dozens of countries, with plans to scale further in the coming years.

For investors, the significance is twofold. First, it shows that Qualcomm can leverage its chip expertise into high-value automotive applications, building a recurring revenue base well beyond smartphones. Second, it demonstrates the company’s ability to move past the overhang created by Apple Inc.’s NASDAQ: AAPL decision to drop Qualcomm as a key supplier in favor of its own in-house modem tech.

QCOM: Analyst Conviction Building

The street is beginning to notice. In the past two weeks, the team at Arete Research upgraded its rating on Qualcomm from Neutral to Buy, attaching a fresh $200 price target.

From current levels, that implies a targeted upside of around 25%. The move reflects growing confidence that Qualcomm’s diversification strategy is likely to result in significant revenue tailwinds. 

That sentiment is critical for a stock whose rallies have always struggled for oxygen. Investors and analysts alike have long respected Qualcomm’s technology, but that hasn’t stopped its shares from developing a reputation for stagnation.

The bulls will be looking at this move into autonomous driving as a new chapter in Qualcomm’s story, and if it can gather some momentum, then it may suddenly become interesting to Tesla die-hards, too. 

Remaining Patient 

It would be a stretch to say that they’ll be competing head-to-head, but there’s undoubtedly going to be some overlap. While one is still an end-to-end automaker that uses its own technology, and the other is a simple supplier, in the battle for investor attention around hands-free driving, Qualcomm has just raised its hand.