Why Qualcomm Is Outperforming NVIDIA After Months of Lagging

Key Points

• Qualcomm shares are up 10% since early August, while NVIDIA’s have lost 5%. 
• Analyst upgrades and diversification into auto and IoT are fueling fresh momentum. 
• The company’s valuation remains compelling compared to peers, with recent price targets ranging up to $200. 

Qualcomm Inc. NASDAQ: QCOM has long been a frustrating stock to both watch and own. The company is firmly embedded in the red-hot semiconductor industry, has a track record of consistently beating Wall Street expectations, and continues to generate healthy cash flows. Yet, despite all that, Qualcomm shares are only barely positive for the year.

The bears will argue that this underperformance confirms a long-standing narrative of missed opportunities and poor execution, and they might well have a point. 

But over the past three weeks, something interesting has happened. Qualcomm has begun to outperform NVIDIA Corp NASDAQ: NVDA significantly, a name it has lagged for years. Since the first week of August, Qualcomm has gained about 8%, while NVIDIA is down roughly 5% over the same period.

While no one is suggesting Qualcomm is about to deliver the four-digit rallies that NVIDIA investors have been treated to in recent years, the shift is notable and worth examining. Some questions that come to mind include: what exactly does this outperformance look like, what’s driving it, and what does it mean for the stock’s prospects?

A Good Looking Chart for Qualcomm Stock

Starting with the technical action, it’s clear that over recent sessions, it’s played a large role in sustaining the bullish momentum. Shares have been up more than 10% since early August, and while Tuesday’s session saw a dip alongside the broader market, buyers stepped in aggressively, taking the stock higher into the close.

That pattern, where any bouts of selling are quickly bid back up, has been consistent for a theme for Qualcomm for some months now, with the bulls ready to step in on basically any pullback.

This was also the case for NVIDIA earlier in the summer, but the stock has struggled to keep gaining since July. Instead, recent weeks have been characterised by opposite technical actions to those currently present in Qualcomm—NVIDIA’s shares are starting to set lower highs and lower lows. 

This technical divergence alone explains the change in fortunes for each of the tech giants, but is it fair for investors to expect Qualcomm to continue gaining if NVIDIA is slipping? 

Valuation Discount Drives Bullish Qualcomm Outlook

According to the more recent analyst updates on Qualcomm, the answer is yes. In July, the teams at Mizuho and Rosenblatt were among many who reiterated their Buy ratings, highlighting Qualcomm’s growth prospects.

Recently, there have been new bullish calls from the likes of Arete Research, who upgraded their rating on the stock last week from Hold to Strong Buy. They also set a price target of $200 for Qualcomm at $200, which indicates a potential upside of about 25% from where the stock closed on Tuesday.

A consistent theme among the bulls has been valuation. Despite decent performance, the analysts argue that Qualcomm trades as if it is in distress while its fundamentals remain healthy. Management’s focus on transformation, especially in diversifying revenue streams, has been another key driver. 

Strategic Diversification Moves

Their recent presentation at the Deutsche Bank Technology Conference spoke to this point specifically and gave some weight to this story. Qualcomm emphasized that its long-term growth is no longer centered on handsets alone, with Automotive now emerging as a major pillar, and demand for its ADAS and in-car compute platforms accelerating.

The company’s industrial and IoT businesses are also scaling steadily, with leadership pointing to meaningful progress already underway and a clear path to much larger contributions over the coming years. There’s a sense of reinforced confidence seeping into shares that Qualcomm’s diversification strategy is finally gaining traction and setting the stage for solid revenue growth over the coming quarters. 

What to Watch From Here

Qualcomm's immediate test is whether it can sustain its recent outperformance and consolidate at or above $160.

This would set the stage for a clean move above $165, a level that has repeatedly acted as resistance over the summer. 

NVIDIA’s weakness should also be monitored at the same time.

If the broader semiconductor space were to come under sustained pressure, with NVIDIA’s recent weakness a potential canary in the goldmine, it would be very tough for Qualcomm not to be sold off.

But until then, Qualcomm’s strong fundamentals, healthy guidance, and rising analyst support give it a solid foundation to keep outperforming the industry leader.