This year has been a bit disappointing for both Intel (NASDAQ:INTC) and Qualcomm (NASDAQ:QCOM) shareholders. Despite posting strong quarters, including Intel's record-breaking start to the year and Qualcomm beating expectations on both the top and bottom lines, the former's stock price is down 5.5% in 2017, while Qualcomm shares have nosedived 13%.

Both Intel and Qualcomm are focused on burgeoning markets, including smart cars and similar Internet of Things (IoT) opportunities, along with drones, 5G, and virtual reality. Investors appeared to be on board with those efforts. But slowing cloud data center growth has hurt Intel, and the multiple lawsuits Qualcomm is facing create considerable uncertainty.

Before dismissing either Intel or Qualcomm, though, the fact remains that both offer compelling arguments in their favor. Let's consider which may be a better buy.

Futuristic picture of a digitized world.

Image Source: Getty Images.

The case for Qualcomm

Qualcomm's legal troubles are especially unfortunate considering its strong fiscal second quarter. Excluding one-time items, Qualcomm's revenue climbed 8% to $6 billion, above pundits' estimates. Strong expense management helped boost adjusted earnings per share an impressive 29% to $1.34, well above last year's $1.04 per share.

Operating cash flow grew to $880 million, good for an 11% improvement. Continued advances in 5G technologies and what the company calls "growth opportunities beyond mobile into automotive, IoT, security and networking" bode well for Qualcomm's future. But Qualcomm's legal troubles are taking center stage.

South Korea got things started by levying an $853 million fine that cited "monopolistic" mobile patent practices. Then the U.S. Federal Trade Commission jumped on board with similar allegations, which was followed shortly by longtime customer Apple (NASDAQ:AAPL) filing its own $1 billion suit.

The wrangling with Apple hit home, causing Qualcomm to lower guidance for its third quarter by $500 million after the iPhone maker refused to pay its manufacturers for the royalties they owe to Qualcomm. Qualcomm's licensing revenue is vital, accounting for 87% of earnings before taxes last quarter. However, Qualcomm has been down this legal path before, shelling out $975 million to China a couple of years ago, and now cites the world's largest smartphone market as a key growth driver. If the same happy ending is in store for Qualcomm's current legal woes, it could make Qualcomm the better buy.

The case for Intel

The $14.8 billion in revenue Intel posted last quarter set a record, but investors promptly dismissed the performance, largely because of a meager 6% increase in data-center sales to $4.2 billion and concerns that the surprisingly solid PC sales from the first quarter aren't sustainable. The data-center results were especially painful, given CEO Brian Krzanich's statement that Intel isn't about PCs but is rather a data center-first company.

That said, Intel's future lies in cutting-edge new markets, including IoT. Its $15.3 billion deal for Mobileye should lay to rest any lingering doubts about its commitment to change, as should its focus on commercial drones, including the new Falcon 8+; 5G, utilizing the Xeon scalable processor; and the powering of virtual-reality solutions -- all in addition to data centers.

All of the opportunities Intel is focused on offer nearly unlimited upside. Drones will generate an estimated $6 billion this year, nearly $4 billion of which will come from commercial devices, and the market is still in its infancy. On the other hand, nearly $1 trillion is expected to be spent on cybersecurity between now and 2021, which made the Intel security unit's 1% drop in revenue to $534 million last quarter tough to swallow.

But similar sky-high revenue expectations for IoT mean Intel is focused on all the right areas; it's simply a matter of time and execution. That's why Intel and its 3.15% dividend yield make it the better buy for investors with an eye toward the future. Don't be surprised to see Qualcomm with its stellar 4% dividend weather the legal storms, but for now at least there are simply too many unanswered questions.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.