Most investors looking for a great artificial intelligence (AI) investment seem to find Nvidia first. And that's understandable. Not only is the company's technology at the heart of most AI platforms, but it's performed like a champ since the artificial intelligence craze began in earnest a couple of years ago. Indeed, Nvidia shares' 400%-plus run-up since this point in 2022 has likely turned a handful of investors into millionaires already.
Nvidia isn't the only outfit to benefit from the ongoing growth of the AI industry, however. Now that the dust is settling, it's becoming clear there's more to the movement than mere computer processors. Walls full of individual processors must be linked together, and as time marches on, artificial intelligence solutions must move beyond data centers into people's mobile devices -- smartphones -- for the technology's potential to be fully realized.
Enter Qualcomm (QCOM +0.40%), which may be AI's next great investment, even if few folks are talking about it right now.
The Qualcomm you don't know
Older investors will remember Qualcomm as a powerhouse during the earliest days of the cellphone era. Before Apple debuted its first iPhone in 2007 and before Samsung turned up the heat on its mobile tech, Qualcomm was not only a provider of many of the components found in those devices, but a popular mobile phone brand in and of itself.
Clearly, some things have changed since then, but not necessarily for the worse. As other players have displaced Qualcomm on the branded mobile phone front, the company's successfully doubled down on others. Case in point: automobiles -- connected automobiles, to be specific. Qualcomm's chips power a variety of modern in-vehicle solutions including driver assistance, maps, and entertainment.
Smart homes are also in its wheelhouse. There's a very good chance that a thermostat, refrigerator, or air conditioner that can be managed remotely uses Qualcomm-made components.
Much of this company's product base is far more practical and necessary than clever home appliances and automotive conveniences, though. Qualcomm's tech is capable of bridging the gap between 5G cellphone connectivity and more localized WiFi connections, for example, allowing it to serve the service providers you pay for cellphone service.
Perhaps the most promising game-changing technology in the tech company's portfolio, however, is actually one that puts it squarely back in the mobile phone game. That's the latest version of its Snapdragon processor, which is capable of handling generative AI duties directly from the device it powers.
The opportunity Snapdragon's been waiting on
You may not realize it, but most consumer-facing AI-powered chat platforms like ChatGPT and Microsoft's Copilot are handling their AI work in the cloud. That is to say, any "thinking" that Copilot or ChatGPT needs to do is done from one of these companies' data centers and then delivered to you as a response to your request. The approach works fine, although it's hardly efficient enough to use AI's full potential.
The big bottleneck? Mobile phones that simply don't have enough computing power on board to handle generative AI duties. That's changing, though. Apple has already confirmed that devices with its powerful A17 processor (and presumably any processors coming after this one) will be able to do true artificial intelligence work from the device itself.
NASDAQ: QCOM
Key Data Points
Apple isn't the only outfit able to offer such solutions, though, and arguably not even the best one. Qualcomm's latest Snapdragon mobile processor -- the newest in a line of chips it's been making since 2006 -- is the first mobile processor built from the ground up to handle generative AI duties. This means it's not only capable of creating images from nothing more than a text-based description, it can also serve as a powerful digital assistant.
It can even handle judgment-oriented tasks like notifying you of important emails and making suggestions about a nearby activity you may be interested in. The Samsung Galaxy Z Fold and Flip both come with these Snapdragon 8 processors on board, and other phones are certainly on the way.
But Qualcomm is looking beyond smartphones for ways to use this technology. Laptops and virtual reality goggles with AI-capable Snapdragon processors are now readily available. Microsoft's business-minded Surface Pro laptop, in fact, has an AI-capable Snapdragon X processor on board. Mordor Intelligence believes the AI computing hardware market is likely to grow at an annualized pace of 26% through 2029.
But is Qualcomm a millionaire-maker stock?
It arguably is, although that answer comes with a major footnote. That is, it could take a while for even a sizable investment now to become a seven-figure stash later. Like, a decade or more.
As of the latest look, Qualcomm's top line is expected to improve by just over 9% this year before growing a little over 10% next year. That's healthy, to be sure. But it's not jaw-dropping. Even CEO Cristiano Amon's outlook is seemingly tempered. As he tepidly explained in the recent Q2 earnings conference call, "We don't have any heroic assumptions in our model, but we actually like the direction this is going that could create an interesting upside if we have an AI-driven upgrade cycle."
The company is also going to be competing with the venerable Apple in the meantime, and with any other chipmaker that's interested in entering the fray. And even as onboard AI-capable smartphones become the norm, this company will still be limited by its established size.
What Qualcomm lacks in potential growth pace, however, it more than makes up for in the longevity of its future growth. The company has been developing its Snapdragon platform for a long, long time, adding the protection of new patents along the way. It's also a turnkey technology that's ready for tech companies like the aforementioned Samsung and Microsoft (and others) to begin using today. Once a customer starts using such systems, it's often easier to continue using them than it is to switch to a competing solution.
This is a long way of saying that if you can make a major long-term commitment to this stock, it's got a lot of high-odds potential to offer. It may even have enough upside to help you become a millionaire, provided you've got enough willpower to leave it alone, even during the rough patches.
