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Qualcomm (QCOM) popped all the way above $200 from its $170 open today after the company announced it was entering the AI data center market with two new inference-optimized chips. The stock has settled up ~12% as of this writing, but many analysts are now optimistic that this rally can turn explosive.

The company announced the AI200 and AI250. The first one is expected next year, with the latter expected in 2027. It will also be selling accelerator cards and rack-scale server solutions. It is yet to be seen how good these chips will be and whether or not the company will be able to compete with Nvidia (NVDA) or AMD (AMD).

Qualcomm is targeting AI inference, whereas Nvidia’s Blackwell targets both training and inference. This means Nvidia will remain the top-of-the-line choice if AI companies keep aggressively training better models.

That said, if companies shift towards inference, this can leave Qualcomm with an advantage.

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Why I’d buy QCOM stock hand over fist

QCOM stock trades at one of the lowest multiples for a semiconductor company. You’re paying just 14 times earnings because this company is mostly associated with chips used in mobile devices. Not only that, this company is being actively ditched by phone-makers like Apple (AAPL) and Samsung in favor of in-house production.

But this new pivot to AI is opening up significant upside potential if management can execute well. Qualcomm will bring power-efficient and cost-effective chips to the table, which are expected to be more in demand due to open-source lightweight models gaining popularity.

Companies are increasingly experimenting with local AI models on wearables. Qualcomm is well-positioned to supply chips for that market in the coming years.

Moreover, if perception of Qualcomm changes from a declining mobile phone chips company to an AI chips company, the stock could easily trade at about 20 times forward earnings if chips start seeing demand next year.

There’s plenty of upside potential now, and the valuation is quite low. I’d buy.

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