Qualcomm, the once-underrated chipmaker, is making a bold statement in the AI arena. With a late entry into the AI chip race, Qualcomm has been playing catch-up, but its recent announcement has shifted the narrative. The company's new data center strategy, highlighted in its June 24 news release, is a game-changer. Management's confidence in achieving long-term growth in the agentic AI era is evident, and their aggressive goals are a testament to this. The boosted 2029 guidance target of $40 billion and the aim for over $15 billion in AI infrastructure revenue from data centers by fiscal 2029 are impressive. But what makes this particularly fascinating is the potential for growth beyond 2029. Data centers, robotics, industrial AI, personal AI, and agentic AI are all catalysts that will strengthen Qualcomm's financials. The company believes it will have a $1.7 trillion total addressable market by 2030, and investors are taking notice. The entry into AI is already translating into more sales, and the company's partnerships with hyperscalers are a significant step forward. However, it will still be a while before these shifts lead to meaningful revenue growth. For the current quarter, management is projecting a top line of between $9.2 billion and $10 billion, or $9.6 billion at the midpoint, implying a 7.4% year-over-year decline. Despite this, the stock is trading at values that assume its AI initiatives will not be realized. Its 21.2 price-to-earnings ratio makes it far more favorably priced than Nvidia or Broadcom, and its price/earnings-to-growth ratio below 1 indicates undervaluation. The stock's rally may not happen right away, but the valuation doesn't yet reflect the possibility of material fundamental improvements in 2027 and beyond. Those who buy shares today will even get to collect a dividend that yields 1.8% while waiting for the market to notice. In my opinion, Qualcomm's late entry into the AI chip race may have been a disadvantage, but its recent announcement and focus on AI are a strong indicator of its future success. The company's aggressive goals and partnerships with hyperscalers are a testament to its commitment to AI, and the potential for growth beyond 2029 is exciting. While the stock may not rally right away, the valuation is a steal, and those who buy shares today will be rewarded with a dividend while waiting for the market to recognize Qualcomm's potential.
