Qualcomm’s Post-Earnings Dip: A Prime Buying Opportunity?
It’s not often that the stock market offers investors an opportunity to take advantage of discounts on some of the biggest names out there. However, when it comes to earnings season, that usually changes after stocks swing heavily in one way or the other after announcing their financial figures. Today, there is one opportunity to buy an earnings dip in the technology sector.
This opportunity comes through shares of Qualcomm Inc. (NASDAQ: QCOM). Despite falling by over 6% the day it announced its quarterly earnings results, the stock has pretty much erased all the losses and is now looking to reach a new short-term high. Even with all of the volatility and concerns growing in semiconductors and artificial intelligence, this stock still promises a better future.
Not only through its fantastic risk-to-reward ratio but also by being an institutional favorite as of recent months and offering an undeniable discount compared to peers like NVIDIA Co. (NASDAQ: NVDA) or Taiwan Semiconductor Manufacturing (NYSE: TSM). More than that, the stock has attracted some Wall Street interest despite its bearish price action after earnings, and that’s a rare occasion.
Why Qualcomm Remains Immune
A couple of weeks ago, the Chinese company DeepSeek sparked some concerns about the true competitive state of the artificial intelligence landscape, claiming that models and hardware could achieve what today’s standards call for with a fraction of the current cost and time utilized.
Of course, investors' initial reaction was to sell off all stocks related to this artificial intelligence claim. However, the market can often ignore the broader facts. One of those facts is that Qualcomm is involved in much more than artificial intelligence.
Through its exposure to 5G technology, which is completely outside of the artificial intelligence realm, emerging market wealth creation and the need for smart devices could drive Qualcomm’s demand higher. This is why the stock did not sell off as badly as others did and why it recovered so quickly.
Compared to shares of Advanced Micro Devices Inc. (NASDAQ: AMD), which also reported earnings recently, Qualcomm’s 6% decline pales in comparison to its peer’s 11.5% overnight decline. Building on this fundamental truth, here are other factors investors could keep in mind moving forward.
Institutions Bought the Dip
After the Qualcomm stock dip, some institutions decided that the market’s perspective might have been slightly exaggerated. Those from Charles Schwab Investment Management boosted their holdings in Qualcomm stock by as much as 2.5% as of early February 2025, bringing their net position to a high of $1 billion today.
Others followed suit, like Victory Capital Management, which stacked up a position worth $320 in Qualcomm stock. That being said, investors can now connect the dots behind this buying, tying it directly to the fact that Qualcomm is probably in the clear from this artificial intelligence debacle.
However, these buyers weren’t the only ones who could express their views on Qualcomm stock. Over the past month alone, up to 4.2% of the company’s short interest was wiped out, a clear sign of bearish capitulation as short sellers decide that the upside is not worth them keeping a short position on.
If all of these factors weren’t enough to sway investors in the right direction, this one could. Wall Street analysts typically avoid boosting stocks that have performed poorly in recent months, and trading at only 73% of its 52-week high would definitely place Qualcomm in this bearish category.
That is why the recent buy rating from Benchmark analysts means twice as much now with this bearish price action. More than this rating, the stock's $240 per share valuation would call for not only a new 52-week high to erase all the earnings losses but also a net upside of as much as 42% from where it trades today.
With fundamental tailwinds at its back and a bullish view coming out of the markets, Qualcomm might be the best risk-to-reward setup in the industry. Still, that fact goes well beyond the price action. Qualcomm’s price-to-earnings (P/E) ratio of only 18.8x compared to the rest of the computer sector would send it into a steep discount.
The broader industry now trades at an average P/E of 202.6x, so in all accounts, Qualcomm has given buyers and sellers all the reasons to start shifting their portfolios before it’s too late.
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