If you want to own a stock that will give you direct exposure to the growth of artificial intelligence, Qualcomm (NASDAQ:QCOM) stock probably shouldn’t be your first choice. Frankly, Qualcomm hasn’t impressed investors lately even if the company’s stock looks like a “good value.”
Qualcomm isn’t a terrible company, by any means. Yet, we want to encourage investors to be selective with their capital allocations.
Besides, chasing dividend yields or buying just any stock with a low price-to-earnings ratio can lead to poor results. Therefore, discerning investors shouldn’t be in a hurry to take a share stake in Qualcomm.
QCOM Stock’s Lackluster Performance
Qualcomm’s GAAP trailing 12-month P/E ratio of 12.4x might catch the attention of some value hunters. Also, Qualcomm pays a forward annual dividend yield of 2.63%.
A couple of percentage points per year isn’t much of a consolation prize, though. QCOM stock isn’t up by very much year-to-date, even while many technology stocks have been on fire in 2023. Clearly, the market isn’t buying whatever Qualcomm is selling.
People have been calling Qualcomm “undervalued” for a while now. That’s fine, but it’s not much fun to watch other tech names pull ahead while your portfolio’s getting left behind. QCOM stock has chopped around but gained no ground since late 2020, which is certainly disappointing.
Qualcomm Jumps on the AI Bandwagon
Analysts expect little from Qualcomm, apparently. They anticipate that Qualcomm’s current-quarter EPS will be $1.81, which would be the company’s lowest quarterly EPS in two years.
This might help to explain why Qualcomm’s management would try to give the company a boost by jumping on the AI bandwagon.
Surely, it’s not just happenstance that Qualcomm Senior Vice President Alex Katouzian repeatedly alluded to AI in a recent computer expo, saying it “touches virtually every aspect of smartphone experience.”
For years, Qualcomm’s primary business has been the development of hardware to help power 5G network connectivity. Now that generative AI is the hottest thing on Wall Street, however, Qualcomm is leaning heavily into this trend.
But again, the numbers don’t lie and neither does the market. It’s easy to find genuinely AI-focused companies with stocks that have performed much better than QCOM stock.
The point is, if you’re only considering investing in Qualcomm to get generative AI market exposure, there are better options out there.
There’s No Rush to Buy QCOM Stock
Before hitting that “buy” button, take you time and really think about why you’d want to invest in Qualcomm. A couple of percentage points’ worth of dividends shouldn’t be a sufficient reason. A stock can look like a good “value” but continue to drift for months on end.
Qualcomm also doesn’t look like a must-have if you’re seeking prime exposure to the fast-growing generative AI product market. All in all, QCOM stock doesn’t deserve an “F,” but it does get a “D” rating as you can do better if you conduct your due diligence.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
