Admittedly, the term "monster opportunity" may seem like a relative description in today's market. The almost 28% decline from all-time highs in the Nasdaq Composiite index has taken many semiconductor stocks to low valuations, a factor that could make opportunities more lucrative. 

However, despite the stock price declines, some tech stocks' prospects for elevated revenue growth remain high. In the current environment, investors should pay closer attention to the opportunity in Qualcomm (QCOM 4.26%), as the chipmaker continues to benefit from the 5G upgrade cycle.

Qualcomm's struggles

Qualcomm's current value proposition revolves around its position in the smartphone chipset market. Several companies participate in this business. But despite the best efforts of Apple and other companies, Qualcomm continues to maintain its lead in the 5G chipset space.

Nonetheless, fears of a recession have led to concerns about consumer spending. According to the U.S. Bureau of Labor Statistics (BLS), the U.S. inflation rate now stands at 8.6%. The bears are concerned that increased expenses will leave consumers with less available money to put toward buying 5G phones. There are also fears of a resurgent COVID-19 caseload in places like China, a country that accounted for about two-thirds of Qualcomm's revenue in fiscal 2021. Parts of China went into temporary lockdown recently to fight increased COVID-19 cases.

These concerns have hit Qualcomm stock, which is down by more than one-third since it peaked in January.

Numerous tailwinds could turn Qualcomm around

Despite the slowdown, the 5G upgrade cycle rolls on. Grand View Research forecasts the smartphone chipset market will reach $66.5 billion by 2028. It was $7.2 billion in 2021, suggesting a compound annual growth rate of 69%! Given Qualcomm's industry dominance, it could prosper during a tech downturn, even if it has to wait a little longer to earn that revenue.

Moreover, Qualcomm continues to diversify its revenue base away from its handset segment. The company's RF front-end segment helps improve the functionality of smartphones. Also, Qualcomm developed an automotive segment bolstered by its Snapdragon digital chassis, which connects a car's functionality to the outside world and can also enable various levels of autonomous driving.

Still, Qualcomm's fastest-growing segment in fiscal Q2 was the Internet of Things (IoT) at 61% year over year. This utilizes its strength in communications to allow physical objects to stay connected.

Although other segments haven't grown quite as rapidly as IoT, all have posted double-digit revenue growth. That growth in these newer business lines should keep Qualcomm in the market, even if some functionality moves away from smartphones over time. 

Effects on the financials

Additionally, amid the economic slowdown, Qualcomm continues to post strong numbers. In the first half of its fiscal 2022, which ended March 27, Qualcomm reported $21.9 billion in revenue, 35% more than in the first six months of fiscal 2021. Non-GAAP net income surged 50% over the same period to $6.3 billion, as Qualcomm limited its cost and expense growth to 23%.

However, analysts forecast revenue growth will slow to only 8% in fiscal 2023 amid the slowdown in consumer spending. This likely was a primary cause of the aforementioned stock-price decline.

Nonetheless, this has taken Qualcomm's price-to-earnings ratio (P/E) to just 13. This is far below potential competitors such as Apple and Nvidia, which sell for 23 and 41 times earnings, respectively. It also leaves Qualcomm's valuation at a reasonable level, even if revenue growth slows for a time.

The Qualcomm value proposition

Although consumer spending may have distracted some Qualcomm stockholders, the company holds considerable potential for a huge comeback. Even if Qualcomm's revenue growth slows to single digits, the drop will likely be temporary, given this chip stock's position in the 5G chipset market and that industry's rapid growth. Moreover, Qualcomm's diversification into other tech segments should help it keep up with the changes in tech.

Investors can buy this growth story for 13 times earnings. That gives them a compelling entry point into a company that's well-positioned to earn massive gains over time.