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IBM vs. Qualcomm: Which AI Tech Giant Has More Upside Now?
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Key Takeaways
IBM's hybrid cloud and enterprise AI strength positions it favorably against Qualcomm.
IBM's 2026 sales and EPS are projected to rise 4.4% and 7.1%.
IBM trades at 3.3 times forward sales versus Qualcomm's 4.4, offering a more attractive valuation.
International Business Machines Corporation (IBM - Free Report) and Qualcomm Incorporated (QCOM - Free Report) are legacy tech behemoths aggressively expanding into AI infrastructure and enterprise AI solutions, with growing exposure to edge computing and next-generation AI workloads. IBM offers cloud and data solutions that aid enterprises in digital transformation. In addition to hybrid cloud services, the company provides advanced information technology solutions, computer systems, quantum computing and supercomputing solutions, enterprise software, storage systems and microelectronics.
Qualcomm offers high-performance, low-power chip designs for mobile devices, PCs, XR (Extended Reality), automotive, wearable, robotics, connectivity and AI use cases. The company boasts a comprehensive intellectual property portfolio comprising 4G, 5G and other technologies. Qualcomm’s brands include Snapdragon systems-on-chip, FastConnect Wi-Fi and Bluetooth systems, and Qualcomm-branded 4G, 5G and IOT equipment. The company is currently integrating on-device generative AI into all of its product lines.
Let us delve deeper into the companies’ competitive dynamics to understand which is better positioned in the industry and warrants a place in your investment portfolio.
The Case for IBM
IBM is poised to benefit from healthy demand trends for hybrid cloud and AI, which drive the Software and Consulting segments. The company’s growth is expected to be aided by analytics, cloud computing and security in the long term. With a surge in traditional cloud-native workloads and associated applications, along with a rise in generative AI deployment, there is a radical expansion in the number of cloud workloads that enterprises are currently managing. This has resulted in heterogeneous, dynamic and complex infrastructure strategies, which have led firms to undertake a cloud-agnostic and interoperable approach to highly secure multi-cloud management, translating into a healthy demand for IBM hybrid cloud solutions.
IBM has introduced a self-hosted deployment option for IBM Bob, its agentic software development platform. The move is aimed at helping enterprises adopt AI-powered software development and modernization tools while retaining greater control over sensitive data, source code and development environments. The offering can be deployed across on-premises, private-cloud, sovereign-cloud and air-gapped infrastructure, making it particularly relevant for organizations with stringent security, regulatory and data-residency requirements. By enabling customers to run supported AI models within controlled environments or connect to external models through hybrid configurations, IBM is seeking to address growing enterprise demand for secure and governed AI adoption.
Despite solid hybrid cloud and AI traction, IBM is facing stiff competition from Amazon.com, Inc.’s (AMZN - Free Report) AWS and Microsoft Corporation’s (MSFT - Free Report) Azure. Increasing pricing pressure is eroding margins, and profitability has trended down over the years, barring occasional spikes. The company faces a potent threat from AI firm Anthropic as the latter’s Claude Code tool can modernize legacy COBOL systems — a foundational programming language deeply embedded in IBM’s mainframe ecosystem. With Claude Code proposing to substantially automate code exploration, documentation, refactoring and security analysis, it threatened to reduce enterprises’ reliance on specialized legacy service providers like IBM, putting its sustenance at stake.
The Case for QCOM
Qualcomm envisions solid growth opportunities within the mobile space, driven by the strength of its Snapdragon portfolio. Leveraging multi-core CPUs with cutting-edge features, advanced graphics and global network connectivity, Qualcomm Snapdragon mobile platforms deliver fast performance, superb power efficiency, brilliant camera capabilities and state-of-the-art security solutions. Smartphones and mobile devices built with Snapdragon mobile platforms enable immersive augmented reality and virtual reality experiences, brilliant camera capabilities, superior 4G LTE and 5G connectivity, and state-of-the-art security solutions.
The company is also foraying deeper into the realm of AI capabilities within the laptop and desktop business with the launch of the Snapdragon X chip for mid-range AI desktops and laptops. The strategy is aimed at moving beyond the slowing smartphone industry, which is its primary breadwinner. In addition to diversifying its revenue stream, this is likely to further extend QCOM’s AI footprint. It is also gaining traction in the vehicle-to-everything (V2X) communication systems market with the buyout of Autotalks. With seamless access to Autotalks’ comprehensive V2X expertise, it has been able to offer an extensive suite of automotive-qualified global V2X solutions for installation in vehicles, as well as two-wheelers and roadside infrastructure. The company’s V2X chipsets offer production-ready standalone solutions purpose-built for global applications, resulting in direct communication becoming more pervasive.
Despite efforts to ramp up its AI initiatives, Qualcomm has been facing tough competition from Intel in the AI PC market. Shift in the share among OEMs at the premium tier has reduced Qualcomm's near-term opportunity to sell integrated chipsets from the Snapdragon platform. Memory supply constraints and related pricing are adversely impacting its handset revenues as OEMs (particularly in China) continued to draw down channel inventory. Management reiterated that QCT handset revenues from China-based customers are expected to bottom out in the fiscal third quarter and resume sequential growth in the following quarter as the inventory drawdown eases.
How Do Zacks Estimates Compare for IBM & QCOM?
The Zacks Consensus Estimate for IBM’s 2026 sales implies a year-over-year rise of 4.4%, while that of EPS indicates growth of 7.1%. EPS estimates have been trending northward (up 0.5%) on average over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Qualcomm’s fiscal 2026 sales suggests a year-over-year fall of 2.8%, while that for EPS implies a decline of 12.6%. The EPS estimates have remained static over the past 60 days.
Image Source: Zacks Investment Research
Price Performance & Valuation of IBM & QCOM
Over the past year, IBM has plunged 20% against the industry’s growth of 109%. Qualcomm has gained 1.7% over the same period.
Image Source: Zacks Investment Research
IBM looks more attractive than Qualcomm from a valuation standpoint. Going by the price/sales ratio, IBM’s shares currently trade at 3.3 forward sales, lower than 4.4 for Qualcomm.
Image Source: Zacks Investment Research
IBM or QCOM: Which is a Better Pick?
IBM carries a Zacks Rank #3 (Hold) while Qualcomm has a Zacks Rank #4 (Sell).
While IBM expects sales to improve in 2026, Qualcomm expects revenues to decrease year over year. Qualcomm has shown relatively steady revenue growth for years, while IBM has been facing a bumpy road. IBM is trading relatively cheaply compared with Qualcomm, although it has lagged the latter in terms of price performance.
With a better Zacks Rank, stable free cash flow and software-driven revenues leaning toward enterprise SaaS/AI transformation, IBM appears to be comparatively better placed than Qualcomm. Consequently, IBM seems to be the better investment option at the moment.
View the Zacks #1 Rank List
Image: Bigstock
IBM vs. Qualcomm: Which AI Tech Giant Has More Upside Now?
Key Takeaways
International Business Machines Corporation (IBM - Free Report) and Qualcomm Incorporated (QCOM - Free Report) are legacy tech behemoths aggressively expanding into AI infrastructure and enterprise AI solutions, with growing exposure to edge computing and next-generation AI workloads. IBM offers cloud and data solutions that aid enterprises in digital transformation. In addition to hybrid cloud services, the company provides advanced information technology solutions, computer systems, quantum computing and supercomputing solutions, enterprise software, storage systems and microelectronics.
Qualcomm offers high-performance, low-power chip designs for mobile devices, PCs, XR (Extended Reality), automotive, wearable, robotics, connectivity and AI use cases. The company boasts a comprehensive intellectual property portfolio comprising 4G, 5G and other technologies. Qualcomm’s brands include Snapdragon systems-on-chip, FastConnect Wi-Fi and Bluetooth systems, and Qualcomm-branded 4G, 5G and IOT equipment. The company is currently integrating on-device generative AI into all of its product lines.
Let us delve deeper into the companies’ competitive dynamics to understand which is better positioned in the industry and warrants a place in your investment portfolio.
The Case for IBM
IBM is poised to benefit from healthy demand trends for hybrid cloud and AI, which drive the Software and Consulting segments. The company’s growth is expected to be aided by analytics, cloud computing and security in the long term. With a surge in traditional cloud-native workloads and associated applications, along with a rise in generative AI deployment, there is a radical expansion in the number of cloud workloads that enterprises are currently managing. This has resulted in heterogeneous, dynamic and complex infrastructure strategies, which have led firms to undertake a cloud-agnostic and interoperable approach to highly secure multi-cloud management, translating into a healthy demand for IBM hybrid cloud solutions.
IBM has introduced a self-hosted deployment option for IBM Bob, its agentic software development platform. The move is aimed at helping enterprises adopt AI-powered software development and modernization tools while retaining greater control over sensitive data, source code and development environments. The offering can be deployed across on-premises, private-cloud, sovereign-cloud and air-gapped infrastructure, making it particularly relevant for organizations with stringent security, regulatory and data-residency requirements. By enabling customers to run supported AI models within controlled environments or connect to external models through hybrid configurations, IBM is seeking to address growing enterprise demand for secure and governed AI adoption.
Despite solid hybrid cloud and AI traction, IBM is facing stiff competition from Amazon.com, Inc.’s (AMZN - Free Report) AWS and Microsoft Corporation’s (MSFT - Free Report) Azure. Increasing pricing pressure is eroding margins, and profitability has trended down over the years, barring occasional spikes. The company faces a potent threat from AI firm Anthropic as the latter’s Claude Code tool can modernize legacy COBOL systems — a foundational programming language deeply embedded in IBM’s mainframe ecosystem. With Claude Code proposing to substantially automate code exploration, documentation, refactoring and security analysis, it threatened to reduce enterprises’ reliance on specialized legacy service providers like IBM, putting its sustenance at stake.
The Case for QCOM
Qualcomm envisions solid growth opportunities within the mobile space, driven by the strength of its Snapdragon portfolio. Leveraging multi-core CPUs with cutting-edge features, advanced graphics and global network connectivity, Qualcomm Snapdragon mobile platforms deliver fast performance, superb power efficiency, brilliant camera capabilities and state-of-the-art security solutions. Smartphones and mobile devices built with Snapdragon mobile platforms enable immersive augmented reality and virtual reality experiences, brilliant camera capabilities, superior 4G LTE and 5G connectivity, and state-of-the-art security solutions.
The company is also foraying deeper into the realm of AI capabilities within the laptop and desktop business with the launch of the Snapdragon X chip for mid-range AI desktops and laptops. The strategy is aimed at moving beyond the slowing smartphone industry, which is its primary breadwinner. In addition to diversifying its revenue stream, this is likely to further extend QCOM’s AI footprint. It is also gaining traction in the vehicle-to-everything (V2X) communication systems market with the buyout of Autotalks. With seamless access to Autotalks’ comprehensive V2X expertise, it has been able to offer an extensive suite of automotive-qualified global V2X solutions for installation in vehicles, as well as two-wheelers and roadside infrastructure. The company’s V2X chipsets offer production-ready standalone solutions purpose-built for global applications, resulting in direct communication becoming more pervasive.
Despite efforts to ramp up its AI initiatives, Qualcomm has been facing tough competition from Intel in the AI PC market. Shift in the share among OEMs at the premium tier has reduced Qualcomm's near-term opportunity to sell integrated chipsets from the Snapdragon platform. Memory supply constraints and related pricing are adversely impacting its handset revenues as OEMs (particularly in China) continued to draw down channel inventory. Management reiterated that QCT handset revenues from China-based customers are expected to bottom out in the fiscal third quarter and resume sequential growth in the following quarter as the inventory drawdown eases.
How Do Zacks Estimates Compare for IBM & QCOM?
The Zacks Consensus Estimate for IBM’s 2026 sales implies a year-over-year rise of 4.4%, while that of EPS indicates growth of 7.1%. EPS estimates have been trending northward (up 0.5%) on average over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Qualcomm’s fiscal 2026 sales suggests a year-over-year fall of 2.8%, while that for EPS implies a decline of 12.6%. The EPS estimates have remained static over the past 60 days.
Image Source: Zacks Investment Research
Price Performance & Valuation of IBM & QCOM
Over the past year, IBM has plunged 20% against the industry’s growth of 109%. Qualcomm has gained 1.7% over the same period.
Image Source: Zacks Investment Research
IBM looks more attractive than Qualcomm from a valuation standpoint. Going by the price/sales ratio, IBM’s shares currently trade at 3.3 forward sales, lower than 4.4 for Qualcomm.
Image Source: Zacks Investment Research
IBM or QCOM: Which is a Better Pick?
IBM carries a Zacks Rank #3 (Hold) while Qualcomm has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
While IBM expects sales to improve in 2026, Qualcomm expects revenues to decrease year over year. Qualcomm has shown relatively steady revenue growth for years, while IBM has been facing a bumpy road. IBM is trading relatively cheaply compared with Qualcomm, although it has lagged the latter in terms of price performance.
With a better Zacks Rank, stable free cash flow and software-driven revenues leaning toward enterprise SaaS/AI transformation, IBM appears to be comparatively better placed than Qualcomm. Consequently, IBM seems to be the better investment option at the moment.