The rapid pace of semiconductor innovation has made the world smarter, healthier, greener, and better connected. Tomorrow’s transformative technologies include artificial intelligence, autonomous driving and electric vehicles, and advanced wireless networks.

Furthermore, the increasing adoption of Artificial Intelligence (AI), the Internet of Things (IoT), and cloud computing has further fueled the demand for semiconductor chips. These emerging technologies heavily rely on the processing power and data storage capabilities provided by these chips. The semiconductor chip market is expected to grow at a CAGR of 8.4% by 2031.

Against this backdrop, let’s compare two chipmaker stocks, Intel Corporation (INTC - Get Rating)  and QUALCOMM Incorporated (QCOM - Get Rating), to determine which chipmaker is a smarter investment.

The Case for Intel Corporation Stock

With a $102 billion market cap, Intel Corporation (INTC - Get Rating) designs, develops, manufactures, markets, and sells computing and related products and services worldwide. It operates through Client Computing Group, Data Center and AI, Network and Edge, Mobileye, and Intel Foundry Services segments.

INTC’s stock has plunged 5.6% over the past three months to close the last trading session at $26.39.

Its trailing-12-month CAPEX/Sales and trailing-12-month ROCE of 0.24% and 2.90% are 88.2% and 30.4% lower than the industry averages of 2.02% and 4.16, respectively.

In the fiscal third quarter that ended September 28, 2024, INTC’s net revenue plunged 6.2% year-over-year to $13.28 million. Moreover, its net loss came in at $16.64 million, and its net loss per share stood at $3.88.

Analysts expect INFA’s revenue for the fourth quarter (ending November 2024) to increase 2.7% year-over-year to $457.09 million. However, the company’s EPS for the same quarter is expected to grow 17.5% year-over-year to $0.38.

INTC’s bleak fundamentals are reflected in its POWR Ratings. The stock has an overall D rating, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has an F grade for Growth and a D for Stability, Sentiment, and Quality. Within the Semiconductor & Wireless Chip industry, INTC is ranked #83 out of 90 stocks.

In addition to the POWR Ratings I’ve just highlighted, you can see INTC’s ratings for Momentum and Momentum here.

The Case for QUALCOMM Incorporated Stock

Valued at $173.76 billion by market cap, QUALCOMM Incorporated (QCOM - Get Rating) provides commercial real estate professional and investment management services to corporate and institutional clients in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company is headquartered in Toronto, Canada.

QCOM’s stock has gained 22% over the past year to close the last trading session at $156.40.

Its trailing-12-month asset turnover ratio and trailing-12-month gross profit margin of 0.73x and 56.21% are 19.3% and 10.8% higher than the industry averages of 0.62x and 50.74%, respectively.

For the third quarter that ended September 29, 2024, QCOM’s revenues increased 18.7% year-over-year to $10.24 billion. Its net income grew 96% year-over-year to $2.92 billion. Its net income per share increased 96.2% year-over-year to $2.59.

Street expects QCOM’s revenue for the fourth quarter ending September 2024 to increase 10.5% year-over-year to $10.96 billion. Its EPS is expected to increase 7.4% year-over-year to $2.95. Moreover, the company has surpassed revenue and EPS estimates in each of the trailing four quarters.

QCOM’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

QCOM has an A grade for Quality and a B for Value. It is ranked first in the same industry.

Click here for the additional POWR Ratings for QCOM (Growth, Sentiment, Stability, and Momentum).

Intel (INTC) vs. Qualcomm (QCOM): Which Chipmaker Is a Smarter Investment?

The semiconductor chip market growth is driven by the increasing demand for advanced technology and the rapid expansion of the digital era. As the world becomes more interconnected, the need for faster, more efficient, and more powerful electronic devices continues to rise. This has led to a surge in the production and consumption of semiconductor chips.

Leading chip companies, such as INTC and QCOM, stand to capitalize on bright industry growth prospects. However, QCOM’s higher profitability and promising near-term outlook favor it as the better chip stock pick.

Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Semiconductor & Wireless Chip industry here.

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QCOM shares were trading at $156.40 per share on Thursday afternoon, down $0.53 (-0.34%). Year-to-date, QCOM has gained 9.70%, versus a 27.18% rise in the benchmark S&P 500 index during the same period.

About the Author: Nidhi Agarwal

Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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