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Qualcomm: Undervalued Chip Stock in Breakout Uptrend

View of the stand of Qualcomm during a fair in Shenzhen city, south China's Guangdong province, 16 November 2016 — Stock Editorial Photography

Key Points

  • Qualcomm stock has risen nearly 30% since April, with a clear uptrend pointing north.
  • However, with a P/E of just 15, its valuation is among the lowest in the space. 
  • There are reasons to be both excited and concerned about this. 
  • MarketBeat previews top five stocks to own in August.

As we start into the back half of July, tech giant Qualcomm Inc. NASDAQ: QCOM continues to build on an uptrend that began quietly in April. It's not flashy, but this sustained rally matters for a stock that's spent much of the past couple of years frustrating investors with choppy, sideways action.

QUALCOMM Today

QUALCOMM Incorporated stock logo
QCOMQCOM 90-day performance
QUALCOMM
$152.61 -1.46 (-0.95%)
As of 04:00 PM Eastern
52-Week Range
$120.80
$200.00
Dividend Yield
2.33%
P/E Ratio
15.54
Price Target
$186.00

They haven't yet reclaimed their highs from February 2025, but shares are still up close to 30% from April's lows. The move is driven by a healthy pattern of higher highs and higher lows—a classic bullish setup likely catching the attention of technically minded investors.

This is the kind of strength that rewards patience. Qualcomm has never been the type of stock that races ahead of the pack, but it holds some solid potential for longer-term gains for those who can stomach the slower pace.

And as we head into its next earnings report at the end of the month, the setup looks compelling.

Why Valuation Matters

Perhaps the most notable aspect of Qualcomm's current standing is its valuation, particularly when compared to its peers. The company is trading at just 15x earnings, a figure Wall Street is more accustomed to seeing with slow-moving defensive or cyclical stocks, not growth-focused tech names.

Let's step back for a moment. The price-to-earnings (P/E) ratio is one of the most commonly used valuation metrics. It compares a company's current share price to its earnings per share and produces a single number for investors to consider against other stocks in the space.

A lower P/E ratio, for example, would suggest a stock is cheaper relative to its peers, at least on paper. 

That's why Qualcomm's P/E of 15 stands out. It looks like a bargain next to NVIDIA Corp's NASDAQ: NVDA at 55 and Advanced Micro Devices Inc's NASDAQ: AMD at around 117. By that measure, Qualcomm is one of the most affordable large-cap semiconductor companies available right now.

This can be a very good thing. Buying into NVIDIA today, after its meteoric rise back to all-time highs, can feel like chasing. With Qualcomm, however, you get the sense you could be early to the party, rather than late.

Cheap Doesn't Always Mean Undervalued

QUALCOMM Stock Forecast Today

12-Month Stock Price Forecast:
$186.00
21.92% Upside
Hold
Based on 26 Analyst Ratings
Current Price$152.56
High Forecast$225.00
Average Forecast$186.00
Low Forecast$140.00
QUALCOMM Stock Forecast Details

Of course, low valuations aren't always a good thing, and sometimes they can signal doubt. When Wall Street isn't willing to assign a higher multiple, it often means there's a lack of conviction in the company's growth trajectory or its competitive positioning.

That appears to be the case with Qualcomm. Despite solid earnings beats in recent quarters, the market still isn't rewarding them with anything like the eye-watering rallies the likes of NVIDIA have seen.

Citi's reiteration of its Neutral rating last week underscores this sentiment. The firm held back on giving Qualcomm a full Buy rating and seems to be awaiting stronger signals that Qualcomm can deliver on its potential.

In this context, buying Qualcomm could be more of a contrarian trade than it might first appear. Investors are effectively betting that the market is underestimating its upside and that continued execution will eventually force a re-rating.

A Low Bar Can Still Be a Launchpad

Qualcomm is a strange one. It's in the right sector, with the right exposure and a proven track record, yet it still appears to be priced as if it's a secondary player. That disconnect is either a warning sign or an opportunity.

The company's next earnings report, due at the end of July, could well be a pivotal moment. The stock has a strong track record of beating analyst expectations, and another beat would help reinforce the bull case. It would also put more pressure on Wall Street analysts to re-evaluate their conservative stance.

The uptrend is still intact, the company is executing well, yet the stock remains relatively unloved by institutional investors. For those with the right appetite for risk, that's not a bad setup for a potential breakout.

Should You Invest $1,000 in QUALCOMM Right Now?

Before you consider QUALCOMM, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and QUALCOMM wasn't on the list.

While QUALCOMM currently has a Hold rating among analysts, top-rated analysts believe these five stocks are better buys.

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Sam Quirke
About The Author

Sam Quirke

Contributing Author

Technical and Fundamental Analysis, Tech Stocks, Large Caps

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Companies Mentioned in This Article

CompanyMarketRankâ„¢Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
QUALCOMM (QCOM)
4.9716 of 5 stars
$152.61-0.9%2.33%15.54Hold$186.00
Advanced Micro Devices (AMD)
4.0741 of 5 stars
$160.410.2%N/A117.95Moderate Buy$152.58
NVIDIA (NVDA)
4.3795 of 5 stars
$173.001.0%0.02%55.81Moderate Buy$181.22
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