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While it's not the hottest semiconductor stock out there, Qualcomm (NASDAQ: QCOM) has been delivering solid gains so far in 2024. Year to date, it's up 14%, versus 10% for the iShares Semiconductor ETF, which tracks the performance of the top chip stocks (Nvidia included) in the U.S.
Clearly, investors are feeling optimistic about Qualcomm, but what's driving the stock higher, and is it still a good time to buy?
The AI movement -- coming to a laptop or smartphone near you?
Qualcomm is a leader in designing mobile chips, including some of the 5G connectivity hardware in top smartphone models from the likes of Apple and Samsung. Additionally, the company has a growing presence in Internet of Things (IoT) and automotive mobile technology.
But with all the artificial intelligence (AI) work going on in the cloud right now, there could be a coming need to enable user devices to support that new technology. Qualcomm has been positioning its family of Snapdragon processors for this AI transition for over a year now. Earlier this year, Samsung unveiled new AI features on its Galaxy mobile devices, which feature some of those high-end Qualcomm Snapdragon chips.
Market research firm IDC recently indicated that global smartphone demand does indeed appear to be rallying -- up nearly 8% year over year in Q1 -- after a nearly two-year drought following big declines in the wake of the pandemic. That could be great news for Qualcomm, and paired with higher average selling prices for processors and 5G connectivity chips, the company could see its revenues run higher this year and next.
A brand new market, ripe for disruption?
Perhaps the biggest reason Qualcomm stock is rallying, though, is that it's nearly time for its Snapdragon X Elite laptop chips to be released into the wild. Last year, Qualcomm unveiled these new chipsets based on Arm architecture -- the same architecture Apple uses for the chips in its best-in-class MacBook lineup.
However, Qualcomm's X Elite processors aren't so much a swipe at Apple as much as they are at Intel's dominance of the PC and laptop space. And if early benchmarked performance tests are reliable, Qualcomm could finally help bring Windows-based laptops to market that can actually go toe-to-toe with the MacBook. A myriad of PC users might be interested in giving X Elite a go.
Qualcomm-powered laptops won't be available until this summer, but it's a big market. Even a hobbled Intel, one that has allowed ample competition from MacBooks, raked in over $29 billion in sales in 2023. If early indications are worth anything, X Elite could be a hit for Qualcomm that could help it scoop out some extra sales from the laptop industry and drive a bit more growth when paired with a rallying smartphone industry.