1 Semiconductor Stock I Can’t Stop Buying

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I keep hitting the buy button on Qualcomm (NASDAQ:QCOM) because the story I bought into three years ago is finally showing up in the numbers, and the market still prices it like a pure smartphone company, while automotive, IoT, and data center revenue lines tell a different story. That gap between perception and reality is exactly what keeps me adding.

My thesis is simple. The chips inside the device in your pocket built this company, but the chips going into cars, factory robots, edge AI devices, and now a hyperscaler data center are what will compound my position for the next decade.

CEO Cristiano Amon framed it plainly on the most recent call, saying “the rise of AI agents is reshaping our roadmap across every platform we develop” and confirming “our entry into the data center, where a leading hyperscaler custom silicon engagement is on track for initial shipments later this calendar year.” That is a new revenue line I am being handed essentially for free at today’s valuation.

Here is the data that backs my conviction.

Three reasons Qualcomm still looks undervalued

First, the diversification is real. In Q2 FY26, Automotive revenue hit a record $1.33B, up 38% YoY, IoT came in at $1.73B, up 9%, and combined Automotive plus IoT grew 20% YoY. For full fiscal 2025, those two segments together grew 27% while non-Apple QCT revenue grew 18% YoY. The pivot is happening on the income statement.

Second, execution is mechanical. Qualcomm has now beaten EPS estimates four consecutive quarters, with Q2 FY26 non-GAAP EPS of $2.65 against a $2.5563 consensus. Behind that, the business throws off cash. Free cash flow yield sits at 5.68%, return on equity at 23.34%, and interest coverage at 18.61x. Gross margin holds at 55.43%.

Third, management is paying me to wait. The quarterly dividend is $0.89 per share, the yield runs 1.69%, and the board just authorized a new $20B buyback. Qualcomm already repurchased $5.4B in the first half of FY26 and returned $12.596B to shareholders in FY25. At a forward P/E of 20, I am not paying a growth-stock premium for a business growing earnings and shrinking the share count.

Qualcomm is paying investors to be patient

Now the risk I refuse to wave away. China is a material exposure, and the handset franchise is leaning on a small group of premium OEM customers, some of whom would happily build their own silicon.

Q2 FY26 handset revenue fell 13% YoY to $6.02B on memory constraints and Chinese OEM softness. Management says Chinese handset revenues should bottom in Q3 FY26 with sequential recovery in the following quarter. I take the risk seriously. I keep buying because the Automotive, IoT, and forthcoming data center revenue lines are absorbing that concentration faster than the bears can model it.

The Investor Day on June 24, 2026, where Qualcomm will detail Data Center and Physical AI plans following the Alphawave Semi acquisition, is the next catalyst I am positioned for. Ten-year shareholders have already seen the stock return strong gains. I am buying the next ten.

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