Is Qualcomm a million dollar stock?

Most investors looking for a great investment in artificial intelligence (AI) seem to find it Nvidia first. And that’s understandable. Not only is the company’s technology at the heart of most AI platforms, but it’s been running like a champ since the AI ​​craze began in earnest a few years ago. Indeed, the more than 400% rise in Nvidia stock from now to 2022 has likely already turned a handful of investors into millionaires.

Nvidia isn’t the only outfit benefiting from the continued growth of the AI ​​industry, however. Now that the dust is settling, it’s becoming clear that the movement is about more than just computer processors. Walls full of individual processors must be connected to each other, and as time goes on, AI solutions must move beyond data centers into people’s mobile devices — smartphones — for the technology’s potential to be fully realized .

Come in Qualcomm (QCOM -0.28%)which may be the next big AI investment, even if few people are talking about it right now.

The Qualcomm you don’t know

Older investors will remember Qualcomm as a powerhouse in the early days of the mobile phone era. Before Apple debuted its first iPhone in 2007 and before Samsung turned up the heat on its mobile technology, Qualcomm was not only a supplier of many of the components found in those devices, but also a popular mobile phone brand in its own right.

Clear, some things have changed since then, but not necessarily for the worse. As other players replaced Qualcomm in front of branded mobile phones, the company successfully doubled down on others. Case in point: automobiles — connected automobiles, more specifically. Qualcomm chips power a variety of modern vehicle solutions, including driver assistance, maps and entertainment.

Smart homes are also in the wheelhouse. There’s a very good chance that a thermostat, refrigerator, or air conditioner that can be controlled remotely uses components made by Qualcomm.

Much of this company’s product base is far more practical and necessary than smart home appliances and car conveniences. Qualcomm’s technology is able to bridge the gap between 5G mobile phone connectivity and more localized WiFi connections, for example, allowing it to serve the service providers you pay for mobile service.

However, perhaps the most promising game-changing technology in the tech company’s portfolio is actually one that puts it back in the mobile phone game. This is the latest version of its Snapdragon processor, which is capable of handling generative AI tasks directly from the device it powers.

The opportunity Snapdragon has been waiting for

You might not realize it, but most AI-based chat platforms like ChatGPT and MicrosoftHis co-pilot handles their AI work in the cloud. That is, any “thinking” that Copilot or ChatGPT needs to do is done from one of those companies’ data centers and then delivered to you in response to your request. The approach works well, although it is not efficient enough to use the full potential of AI.

The big bottleneck? Mobile phones that simply don’t have enough computing power on board to handle generative AI tasks. That’s changing, though. Apple has already confirmed that devices with its powerful A17 processor (and presumably any processor that will come after it) will be able to do real AI work from the device itself.

However, Apple is not the only outfit capable of providing such solutions, and probably not the best either. Qualcomm’s latest Snapdragon mobile processor — the latest in a line of chips it’s been making since 2006 — is the first mobile processor built from the ground up to handle generative AI tasks. This means that not only is it capable of creating images from nothing more than a text-based description, it can also serve as a powerful digital assistant.

It can even handle judgment-oriented tasks like notifying you of important emails and offering suggestions about a nearby activity that might be of interest. The Samsung Galaxy Z Fold and Flip come with these Snapdragon 8 processors on board, and other phones are certainly on the way.

But Qualcomm is looking beyond smartphones for ways to use this technology. Laptops and virtual reality glasses with AI-capable Snapdragon processors are now available. The business-oriented Microsoft Surface Pro laptop has an AI-enabled Snapdragon X processor on board. Mordor Intelligence believes that the AI ​​computing hardware market is likely to grow at an annual rate of 26% through 2029.

But is Qualcomm a million dollar stock?

It probably is, although the answer comes with a major footnote. That is, it could take some time for a sizable investment to later turn into a seven-figure reserve. Like, a decade or more.

As of the most recent look, Qualcomm’s top line is expected to improve just over 9% this year before rising just over 10% next year. It’s healthy, sure. But it’s not amazing. Even CEO Cristiano Amon’s outlook is apparently tempered. As he warmly explained on the recent Q2 earnings call, “We don’t have heroic assumptions in our model, but we actually like the direction it’s going, which could create an interesting upside if we have an upgrade cycle based on AI. “

In the meantime, the company will compete with the venerable Apple and any other chipmaker that is interested in entering the fray. And even if AI-enabled smartphones on board become the norm, this company will still be limited by its established size.

What Qualcomm lacks in potential growth rate, however, it more than makes up for in the longevity of its future growth. The company has been developing its Snapdragon platform for a long time, long time, adding new patent protection along the way. It’s also a turnkey technology that’s ready for tech companies like the aforementioned Samsung and Microsoft (and others) to start using today. Once a customer starts using such systems, it is often easier to continue using them than to switch to a competing solution.

That’s a long way of saying that if you can make a major long-term commitment to this stock, it has a lot of high upside potential to offer. It may even have enough upside to help you become a millionaire, provided you have the willpower to leave it alone, even when times are tough.