It's no secret that Qualcomm (QCOM 0.42%) has been gunning for a piece of the PC and laptop market. In 2016, Microsoft handed the mobile computing giant an exclusive deal to design chips using Arm Holding tech. With the launch of Apple's best-in-class M-series processors using Arm a few years ago, Qualcomm's efforts in the PC market have become more important than ever.

Meanwhile, the competitive landscape in PCs and laptops isn't shaping up well for Intel, which has enjoyed dominant market share in this space for decades. Is it time to buy Qualcomm stock as it tries to scoop up a lucrative new revenue stream? 

A revamped Windows on Snapdragon is almost here

Qualcomm hosted its Snapdragon summit in late October 2023, finally unveiling details on its new "Windows on Snapdragon" chips -- dubbed the Snapdragon X Elite. Qualcomm has gained little traction with its PC chips for Microsoft Windows devices. But the new X Elite chips, powered by Oryon CPUs it got when it acquired Arm-based designer Nuvia in 2021, claim some impressive performance.

Qualcomm has pointed out the similar power usage and computing capabilities of its Arm-based Snapdragon X Elite compared to Intel's top-of-the-line PC chips. In fact, Qualcomm even claimed superior power usage for its new design compared to Apple MacBook laptops.

Qualcomm has also been talking up its work in on-device AI inference on flagship smartphones coming in 2024, and similar capabilities are coming to Windows laptops powered by X Elite in 2024 as well. Time will tell if the performance specs are the real deal, and more importantly, if consumers shift their buying habits.  

Overcoming key roadblocks to gain a foothold

Up to this point, lack of software compatibility with Arm-based Windows PCs has been a big roadblock for Qualcomm, an issue that Apple solved to help make its M-series chips a success. (Apple's M1 and M2 chips now power its entire PC lineup.) Qualcomm said its software engineering work in recent years could change that as its new chips start arriving on shelves sometime next year from PC makers like Lenovo and HP.

This software compatibility issue has provided a protective moat for Intel's x86 PC chips, but that might be gradually changing. What's at stake for Intel could be a big gain for Qualcomm. These days, with AI setting off a massive shift in data center spending in favor of Nvidia, the PC market fuels the majority of Intel's financial performance. Even with a massive downturn in consumer spending this year, Intel's "Client Computing Group" (or CCG, most of which is PC chip sales) brought in $6.8 billion in revenue in Q2 2023, representing 53% of total sales. 

It's a big market ripe for disruption, and Intel's pain could certainly be Qualcomm's gain.

Just as the M-series helped Apple ratchet up its PC market share to a high-single-digit-percentage (through the first half of 2023, according to tech researcher IDC), the Snapdragon X Elite could help Qualcomm gain a small foothold in PC. Perhaps within a few years, Arm-based chips could account for a few hundred million dollars in quarterly sales for Qualcomm, but it's going to take some time for that to develop.

Is it time to buy Qualcomm stock?

It's worth noting that Qualcomm's exclusivity deal with Microsoft will be coming to an end in 2024. Not surprisingly, Nvidia and longtime Intel rival AMD are also reportedly working on Arm-based PC chips, since they already make Arm processors for the data center market.

Thus my caution on getting too excited about the financial benefits of the Snapdragon X Elite. Qualcomm itself hauls in about $8 billion to $9 billion in quarterly sales, the vast majority of which is tied to the flailing smartphone market. PC sales would be a nice add-on just as its automotive business ($434 million in revenue last quarter) has been. However, even a quick few hundred-million-dollars in new sales from Snapdragon X Elite won't move the needle much for Qualcomm.

At this juncture, Qualcomm really needs the smartphone market to stabilize and return to some gradual growth. Until then, the value placed on the stock (Qualcomm currently trades for just 14 times trailing 12-month earnings) seems fully justified. 

I remain a content shareholder, but I see no imminent need to buy more Qualcomm stock due to the recent Snapdragon X Elite announcements, even though it could become a highly disruptive force for Intel next year. Stay tuned for Qualcomm earnings on Nov. 1 for more details.