Shares of Qualcomm Inc. (NASDAQ: QCOM) have been stuck in a frustrating trading range for months despite the chipmaker consistently delivering strong financial results. The stock is down 10 percent since the last week of February and has been testing the lower end of its range from December. While part of this decline is due to the broader market selloff and the cooling investor sentiment around tech stocks, Qualcomm’s underperformance relative to peers seems increasingly disconnected from its fundamentals.
At $158, the tech stock is now trading at 2021 levels, despite posting record revenue and one of its most profitable EPS prints in years. This combination of strong financial performance and a beaten-down stock price means that Qualcomm is now sitting at a price-to-earnings (PE) ratio of just 17.
That number stands out in the semiconductor space, where peers trade at significantly higher multiples. For example, Micron Technology Inc’s (NASDAQ: MU) PE sits at 30, NVIDIA Corp’s (NASDAQ: NVDA) is at 40, while Advanced Micro Devices Inc’s (NASDAQ: AMD) is a lofty 105. The gap suggests that Qualcomm is severely undervalued, and the market is failing to recognize its position in AI-driven chip solutions, automotive growth, and smartphone stabilization.
Earnings Show Strength, But Investors Remain Hesitant
Qualcomm’s latest earnings report in early February was another clear beat on analyst expectations for both revenue and EPS, yet the stock reaction was muted. Despite the company also reporting strong forward guidance, it seems concerns around smartphone demand softness kept enthusiasm in check.
Despite these concerns, Qualcomm’s broader growth potential continues to be a bright spot. The company is making major strides in AI-capable processors, which are becoming increasingly important across effectively every industry and vertical.
Wall Street Sees Major Upside From Here
While the market remains skeptical, analysts have been more optimistic. Following the February earnings report, multiple firms reiterated bullish stances. Piper Sandler, for example, maintained its Overweight rating with a $190 price target, while Benchmark issued a Buy rating with a $240 target.
At Qualcomm’s current price of $158, Benchmark’s price target represents an upside of more than 50 percent. Even analysts with Neutral ratings, such as Cantor Fitzgerald and Evercore ISI, have price targets above current levels, further reinforcing the argument that Qualcomm may be trading at an unjustified discount.
Qualcomm’s ability to continue expanding beyond smartphones is one reason for this confidence. While mobile chips remain a core revenue driver, the company is aggressively pushing into AI-powered computing, automotive processing, and industrial IoT applications, all areas expected to grow in the coming years.
Technical Setup Suggests a Reversal May Be Underway
From a technical standpoint, Qualcomm may be at a turning point. The stock’s relative strength index (RSI) is sitting at 46, signaling slightly oversold conditions, while the MACD is on the verge of a bullish crossover, which often precedes a shift in bullish momentum.
Additionally, shares have recently bounced off December’s low, indicating that a support level may be forming. The inability of bears to push the stock lower here, despite weak market sentiment, suggests that a near-term bottom could be in place.
If momentum shifts and the market begins rotating back into high-quality tech names, Qualcomm could be one of the first to benefit, given its strong valuation case and recent analyst support.
Qualcomm Going Foward
Qualcomm’s record-breaking earnings, low valuation, and strong analyst price targets all point to significant upside potential. The company is currently trading at a valuation discount compared to its peers, and even analysts with more cautious outlooks have price targets that suggest the stock is too cheap at current levels.
For long-term investors, this may be one of the best entry points in months. If the broader market stabilizes and Qualcomm continues its expansion into AI-driven computing, a move back toward $190 or beyond could happen sooner than expected.
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The article "Qualcomm's Low PE Ratio Makes It A Seriously Attractive Stock" first appeared on MarketBeat.
