Nvidia’s growth is explosive, but here are some other artificial intelligence (AI) stocks worth buying:

As artificial intelligence (AI) develops, nvidia It has emerged as one of the best stocks. Not only has it secured a technological edge in the AI ​​chip field, but its chips are even more essential as they support the functions of other AI companies.

Still, this focus may have led investors to ignore other AI chip stocks, which may deserve more attention. Qualcomm (QCOM -0.40%). The leading designer of smartphone chipsets has brought AI innovations not only to smartphones but also to products such as IoT and automotive applications, and more recently, personal computers. Given these innovations, investors may want to give this stock more attention before other potential buyers take notice.

Qualcomm and AI

As a leading smartphone chipset company in the high-end market, Qualcomm has wholeheartedly embraced AI. The Snapdragon 8 Gen 3 chipset has generated strong demand, especially in China. Smartphone sales in the Chinese market have grown by more than 40% year over year, CFO Akash Palkhiwala said during the company’s second quarter fiscal 2024 earnings call. This is probably due to the generative AI capabilities of these devices.

But as investors know, Qualcomm has expanded beyond smartphone chipsets in recent years, and all of those applications incorporate AI. Recently, it has also entered the CPU field and is producing AI-based personal computers. for teeth, microsoft We partnered with Qualcomm to build AI-powered PCs. It’s a move that could shake up a long-dominated industry segment. intel and AMD.

How Qualcomm is financially connected

Nonetheless, for all its potential, finance appears to reflect the recent industry downturn better than its AI-driven future. For the first six months of fiscal 2024 (ending March 24), sales were $19 billion, up just 3% compared to the same period last year.

This is an improvement from the declining sales of recent years, but it is a far cry from the triple-digit sales growth of AI market leader Nvidia.

Nonetheless, profitability has improved significantly due to reduced operating costs. Net profit for the first two quarters of fiscal 2024 was $5.1 billion, up 29% from the same period last year.

Fortunately for shareholders, investors seem to be more focused on Qualcomm’s growth potential than on past performance. Last year, the stock price rose more than 85%, breaking an all-time high.

Additionally, its earnings multiple is lower than that of tier 1 manufacturers, despite its P/E ratio recently rising to 28. taiwan semiconductor, and all the largest AI chip companies. This includes Intel, which has struggled to redefine itself in recent years.

This dynamic still holds true when measured by the forward P/E ratio. That’s because it’s selling for 21 times forward earnings. So, despite the recent rise, it still remains an attractive option for semiconductor stock investors, especially with recent AI innovations.

QCOM PE Ratio (Forward) Data from YCharts

Buy Qualcomm stock

For shareholders looking to invest in the AI ​​chip industry at a low valuation, Qualcomm appears to be the best choice. Thanks to AI, we have strengthened our technological superiority in smartphone chipsets, a core industry.

AI also plays an important role in new industries such as IoT and automobiles. With the recent launch of the company’s AI PC chips, Qualcomm could gain a significant presence in another part of the technology industry. Given recent growth and relatively low valuations, this upward trend is likely to continue for the time being.