Investors can often get caught up in tech trends before they move past the drawing board. That can lead to some stocks getting overvalued, and others getting undervalued.
In the chipmaking space, companies developing AI chips have seen all the attention. But existing chipmakers that can still deliver critical chips outside the AI realm can also be valuable. And buying them now may give investors an edge going into the end of the year.
For instance, wireless communications chip company Qualcomm (QCOM) has been sliding in recent weeks. But the chipmaker will continue to be the supplier to Apple (AAPL) for another three years, against expectations of Apple developing chips in-house.
Shares of Qualcomm are still down 20 percent over the past year, which has pushed its valuation to less than 12 times forward earnings. Investors can likely see more upside ahead here, as Qualcomm continue to build its lead in the wireless chipmaking space.
Action to take: Investors may like shares here. Besides the upside potential in the coming months, the drop in shares has pushed the dividend yield to 3 percent.
For traders, the January 2024 $120 call, last going for about $4.85, could see mid-to-high double-digit returns on a move higher in shares by the end of the year.
Disclosure: The author of this article has a position in the company mentioned here, but does not intend to trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.