Executive Summary
Qualcomm (QCOM) owns the mobile phone. If "Edge AI" (running AI on your device instead of the cloud) becomes real, Qualcomm is the winner. The cloud is too expensive and too slow for an AI assistant that watches everything you do. That processing must happen on the NPU (Neural Processing Unit) inside the Snapdragon chip.
1. The AI PC
Qualcomm is finally breaking the Intel/AMD duopoly in laptops.
- Snapdragon X Elite: This chip runs Windows but with the battery life of a MacBook (Arm architecture). Microsoft is pushing "Copilot+ PCs" exclusively on NPU-enabled chips like Qualcomm's.
2. Automotive
Cars are becoming computers on wheels.
- Digital Chassis: Qualcomm provides the "Snapdragon Digital Chassis" for infotainment and basic ADAS (driver assist). The backlog is $30B+.
Risks to the Thesis
- Apple: Apple hates paying Qualcomm royalties. They are trying to build their own 5G modem to fire Qualcomm. It hasn't worked yet, but the threat is eternal.
- China: A huge portion of revenue comes from Chinese handset makers (Xiaomi, Oppo, Vivo). Geopolitical sanctions could kill this business overnight.
Conclusion
Qualcomm is cheap (low P/E) because the market thinks "Smartphones are dead." We believe "AI Smartphones" will drive a massive upgrade cycle.