To The Moon

With US technology stocks showing a growing divide, $Qualcomm(QCOM)$  is one company I would keep on the watchlist today.

The latest market rally has favoured mega-cap technology companies such as Microsoft, Amazon and Apple, while semiconductor and memory stocks have struggled. Nvidia, Micron and SanDisk have faced selling pressure as investors reassess AI infrastructure spending and valuations.

But I think Qualcomm deserves attention for a different reason.

1. AI Is Not Just About Data Centres

Much of the AI investment discussion has focused on Nvidia’s GPUs and the enormous spending by cloud providers.

However, AI applications also need to run on smartphones, laptops, connected devices and other edge-computing platforms.

Qualcomm has an established position in mobile processors and connectivity technology. Its Snapdragon platforms provide exposure to the development of on-device AI, where certain AI tasks can be processed locally rather than relying entirely on cloud infrastructure.

If AI adoption expands across consumer devices, Qualcomm could benefit from another source of semiconductor demand.

2. The Smartphone Market Remains Important

Qualcomm’s investment case is not without challenges.

Its handset business remains an important revenue driver, making smartphone demand, competition and product cycles important factors.

Apple’s development of its own modem and processor technology is another longer-term competitive consideration.

Investors should also watch whether growth in automotive and Internet of Things businesses becomes large enough to reduce dependence on traditional handset sales.

3. Earnings Are the Immediate Catalyst

Qualcomm is scheduled to report earnings after Thursday’s US market close.

I would pay particular attention to:

• Revenue and earnings guidance.

• Smartphone chip demand and premium handset sales.

• Growth in automotive and IoT businesses.

• Management’s outlook for on-device AI.

• Gross margins and cash generation.

A strong earnings beat alone may not be enough. The forward outlook will matter more if investors are looking for evidence of sustainable growth.

4. My Investment View

I find Qualcomm interesting because its AI opportunity is different from the data-centre investment cycle.

It is not necessarily a direct replacement for Nvidia, but it provides exposure to the possibility that AI computing will increasingly move into everyday devices.

However, I would avoid buying simply ahead of earnings. Semiconductor stocks are experiencing considerable volatility, and even positive results can lead to disappointing share-price reactions if expectations are too high.

I would prefer to see encouraging guidance and a positive market reaction before considering a position.

What I will be watching: Whether Qualcomm can demonstrate that on-device AI, automotive and IoT growth are becoming meaningful contributors to its future earnings.

The next phase of the AI trade may not be determined by who builds the biggest data centres, but by who successfully brings AI into everyday products.

For discussion purposes only. Not financial advice.