We recently published a list of 13 Cheap AI Stocks to Buy According to Analysts. In this article, we are going to take a look at where QUALCOMM Incorporated (NASDAQ:QCOM) stands against other cheap AI stocks to buy according to analysts.
As per Morgan Stanley, in 2025, technology companies are expected to maintain their focus on building AI platforms catering to their enterprise customers’ needs for optimized performance, profitability, and security. The companies have been partnering throughout the AI ecosystem of chip companies, hyperscalers, large language models, data, and software companies. At the same time, they have been tackling the unknowns of US trade policy and resource constraints.
AI Revolution- Biggest Tech Transformation
Wedbush analyst Daniel Ives has been constantly discussing the AI Revolution over the past few years. This is because he believes that this industry exhibits the biggest tech transformation in more than 40 years. As per Ives, the global AI market is projected to touch $407 billion by 2027 and $1.81 trillion by 2030, exhibiting a CAGR of 36%. Amidst such growth potential, several industries have been choosing AI in a bid to solve complex problems and optimize business processes through the use of advanced algorithms, ML, and data analysis techniques, added Daniel Ives.
Since the world generates ~400 terabytes of data on a daily basis, and 90% of the world’s data was generated over the previous 2 years, the analyst believes that several companies continue to look for ways to leverage their datasets to power AI initiatives. The focus is to generate witness operational efficiencies through the automation of repetitive tasks.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Factors Affecting the Growth of the AI Industry
FTI Consulting believes that AI-native companies, which have been developed around foundational and proprietary AI technologies, have seen strong investor interest, and this premium is expected to continue in 2025. Despite high-forward multiples, several AI companies demonstrated strong revenue growth and exhibited sustained earnings, which have kept pace with price. Moving forward, the firm believes that, in 2025, the stronger AI-native companies are expected to develop healthy ARR. The investors will look to balance portfolio risk through emphasizing investment in such companies possessing clear potential for mid-term revenue and profitability, as compared to companies having more long-term prospects.
FTI Consulting also opines that PE investment in AI or AI-influenced targets continues to rise. In 2025, the focus is expected to be on investments fueling significant cost efficiencies with relatively predictable AI applications. Also, the firm sees M&A activity in the broader AI sector to be strong in 2025.
Our Methodology
To list the 13 Cheap AI Stocks to Buy According to Analysts, we sifted through several online rankings to shortlist companies that cater to the broader AI sector and the ones that trade at a forward P/E of less than ~15.0x. Finally, we chose the companies that analysts see upside to. The stocks are ranked in ascending order of their average upside potential, as of May 12. We also mentioned hedge fund sentiments around each stock, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A technician testing the latest 5G device, demonstrating the company’s commitment to innovation.
QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 79
Average Upside Potential: ~14.4%
Forward P/E as of May 12: ~12.4x
QUALCOMM Incorporated (NASDAQ:QCOM) is a critical player in the broader AI industry since it integrates and develops AI technologies throughout the core product lines, such as automotive, mobile, edge computing, and IoT. Bernstein analyst Stacy Rasgon maintained a “Buy” rating on the company’s stock, setting a price target of $185.00. The analyst’s rating is backed by a combination of factors demonstrating QUALCOMM Incorporated (NASDAQ:QCOM)’s recent performance and future prospects. As per the analyst, its Q2 2025 results were strong, with revenues and EPS exceeding market expectations, thanks to the strong performance in its QCT segment throughout sectors such as handsets, automotive, and IoT.
While there are worries related to the tariffs and macroeconomic uncertainties, the proactive approach of management and strategic buybacks exhibit confidence in QUALCOMM Incorporated (NASDAQ:QCOM)’s valuation, added Rasgon. During Q2 2025, the company returned $2.7 billion to stockholders, which includes $938 million, or $0.85 per share, of cash dividends and $1.7 billion of repurchases of 11 million shares. QUALCOMM Incorporated (NASDAQ:QCOM) established itself as a frontrunner in 5G technology and continues to invest significantly in AI capabilities, mainly for edge computing applications. Its emphasis on low-power, connected computing places it favourably to capitalize on the elevated demand trends for AI-enabled devices throughout various sectors. Overall, growth in the AI industry will drive growth for the company via increasing demand for its AI-optimized chips and platforms throughout edge devices, vehicles, and smartphones.
Mairs & Power, an investment advisor, released its Q1 2025 investor letter. Here is what the fund said:
“The Information Technology sector underweight had the largest relative impact on returns during the quarter. Only one of the Fund’s technology holdings posted a positive quarterly return – QUALCOMM Incorporated (NASDAQ:QCOM) – making this a somewhat hollow outperformance. Qualcomm is a “value tech” company which has enviable cash flows but we believe has been consistently underappreciated in the market for its technology licensing business, which has frequently been targeted for legal action by some of its major customers. However, we believe it continues to prove its best-in-class technology and, despite companies attempting to circumvent Qualcomm, we continue to see a long-term position in the wireless technology space for the company.”
Overall, QCOM ranks 10th on our list of cheap AI stocks to buy according to analysts. While we acknowledge the potential of QCOM as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than QCOM but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
