This Stock Reminds Me of AMD in 2025

AI-generated source summary

The analysis focuses on QUALCOMM (QCOM), identifying a significant opportunity for growth driven by their AI accelerator technology and the increasing demand in data centers. Despite a recent earnings report showing a 4% year-over-year decline in revenue, primarily due to a 20% drop in handset chip sales, the company's automotive and IoT segments showed strong growth of 61% and 9% respectively. The core thesis is that QUALCOMM's non-handset revenue, particularly from the data center segment, is projected to accelerate significantly, with forecasts indicating a rise from 24% in FY26 to 60%+ in FY27. Analysts suggest that this growth could offset the decline in handset revenue, with a target of non-handset revenue replacing total Apple product revenues in FY26 and expanding to $15B+ by FY29. The company's strategy involves leveraging its advanced High Bandwidth Compute (HBC) technology, which offers superior performance per watt and lower energy consumption compared to High Bandwidth Memory (HBM). This technology is being deployed in AI infrastructure and is expected to drive significant improvements in cost and performance. The stock is currently trading at a forward P/E of approximately 18x, which is considered reasonable given the growth prospects. The analysis estimates a potential upside of roughly 100% over the next three years, projecting earnings per share to exceed $18 in FY29. The current market sentiment appears to be underestimating QUALCOMM's potential in the data center and AI space, creating a potentially undervalued investment opportunity.

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