Qualcomm Might Be a Hot AI Stock Next Year

If you're looking for the next hot AI stock, you may want to give Qualcomm (NASDAQ: QCOM) a closer look. It has trailed most of the high-flying chipmakers with a measly 28% return over the past five years, but a financial turnaround is starting to take shape.

The stock's current valuation suggests it will continue to deliver uninspiring results, but recent press releases challenge that view.

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Qualcomm is positioning itself for a multiyear tailwind

Although most of Qualcomm's revenue has historically come from smartphones, the company is expanding quickly into chips for AI data centers and humanoid robots. Qualcomm's wearables-specific Snapdragon ARI Gen 1 processor also powers Meta Platforms' smart glasses, which could become the next smartphone.

Any of those catalysts can reinvigorate the sleepy stock, which posted a 3% year-over-year revenue decline in its fiscal 2026 second quarter. While the mainstream demand for AI glasses and humanoid robots remains to be proven, data center chips continue to fly off the shelves.

These developments prompted Qualcomm to more than double its fiscal 2029 non-handset revenue target to $40 billion. That's slightly less than the company's $44 billion in fiscal 2025 revenue. However, non-handset revenue only made up $16.5 billion in total fiscal 2025 revenue.

The valuation is extremely cheap

If you compare Qualcomm to other AI chipmakers like Nvidia and Advanced Micro Devices, it is extremely undervalued. The stock trades at a 20 P/E ratio and a 0.58 PEG ratio, both lower than those of the previously mentioned chipmakers.

Of course, Nvidia and Advanced Micro Devices are both posting much higher revenue and net income growth rates. Qualcomm has been losing market share in recent quarters, as revenue and operating profits have declined.

Qualcomm's valuation makes sense if it continues to post its current numbers. Its handset business accounted for more than two-thirds of total revenue and was down 13% year over year.

That may change soon. Apple has been posting higher revenue growth rates in recent quarters, with new iPhone models doing the heavy lifting. Higher iPhone sales translate into more revenue for Qualcomm, but that's not where the compelling long-term opportunities reside.

The immediate story is how quickly Qualcomm can bring its AI chips to market. That's the path to meaningful revenue growth rates that can make Qualcomm's cheap valuation look dirt cheap. If Qualcomm does well with its AI chips, then it will have an easier path to expanding into humanoid robots. Its good positioning with Meta Platforms already makes it a favorite for AI glasses, assuming that industry takes off and becomes a mainstream success.

Marc Guberti has positions in Apple. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Nvidia, and Qualcomm. The Motley Fool has a disclosure policy.