Qualcomm Doesn’t Look Cheap Next to Its AI Chip Peers. Here’s Why. | The Motley Fool

Qualcomm (QCOM -0.29%) isn’t often mentioned in the same breath as AI leaders like Nvidia (NVDA -0.52%) and Broadcom (AVGO +0.39%). It’s one of the world’s largest mobile chipmakers. Still, its AI-oriented chips haven’t attracted nearly as much attention as Nvidia’s data center GPUs or Broadcom’s custom AI accelerators for hyperscalers.

Qualcomm’s stock has still risen 40% over the past five years, but shares of Nvidia and Broadcom have rallied about 1,000% and 630%, respectively. However, Qualcomm still doesn’t look cheap relative to those AI leaders for three simple reasons.

1. Its AI strategy has limited growth potential

Qualcomm’s main AI strategy is to add edge AI (on-device processing) features to its existing chips. The latest versions of its Snapdragon chips — which power mobile devices, wearables, vehicles, and PCs — process AI tasks locally instead of relying on cloud-based services.

These edge AI chips are innovative, but they primarily…