Investors looking to buy into AI stocks, particularly semiconductor stocks, should look beyond the big names. Nvidia or Broadcom. Additionally, a surge in the memory chipmaker’s prices amid a push for more AI compute power has made those stocks look more expensive.
But investors with just $150 can still buy the best AI chipmaker. Despite the gloomy outlook for next year, Qualcomm (NASDAQ: QCOM ) Seems like a no-brainer buy for patient investors who may face a bit of financial pressure in the near term.
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The growing demand for artificial intelligence computing has created an interesting challenge for Qualcomm.
The chipmaker generates the bulk of its revenue from the sale of wireless handsets. This stems from licensing its intellectual property for both 3G, 4G LTE, and 5G chipsets, as well as making its own baseband chips and mobile processors. Unfortunately, the smartphone industry is facing pressure due to the rising cost of key component memory chips. As a result, Qualcomm has warned that smartphone volumes will decline this year, pushing down its revenue.
The price of memory chips has increased as AI accelerator chips and GPUs are packaged with more memory that facilitates faster and more efficient large language model training and inference. But the supply has not been able to keep up with the demand. Memory chipmaker micron Expect supply to remain tight until the end of calendar 2026. As a result, Qualcomm could see pressure on its revenue in the middle of fiscal 2027 as memory chip supply slows. Management’s second-quarter outlook calls for a 3.5% year-over-year decline in total revenue.
But Qualcomm has worked to diversify beyond smartphones. Its automotive segment continues to grow rapidly and should remain unaffected by the memory chip shortage. Likewise, its Internet of Things (IoT) business should continue to grow over the next few years. Qualcomm is also pushing into the data center chip business with a pair of chips designed for AI inference. This could be a meaningful growth driver over the next few years, partially offsetting the pressure on the handset business.
However, in the long run, Qualcomm looks like a great opportunity. As AI inference moves from something done exclusively on data center servers to something that can be run on devices, Qualcomm is in a great position to capitalize long term. Its Snapdragon mobile processors are among the best high-end chips for smartphones. On-device AI could drive demand for more high-end devices, meaning more devices inside Qualcomm’s chips.
