How a $4 Billion Acquisition Could Be Just What Qualcomm Stock Needs to Challenge Nvidia

Qualcomm (QCOM) shares were in focus on June 24 after the company announced a $3.92 billion all-stock agreement to acquire artificial intelligence (AI) software startup Modular. 

In early trading, investors cheered the acquisition news that reinforces management’s commitment to transform QCOM into a full-stack AI infrastructure provider. 

Versus its year-to-date high, Qualcomm stock is currently down more than 25%. 

Does the Modular Deal Warrant Buying QCOM Shares?

The Modular deal is largely bullish for QCOM stock because it positions the company to challenge Nvidia’s (NVDA) multitrillion-dollar artificial intelligence empire. 

By acquiring  the startup – founded by former Google (GOOG) (GOOGL) engineers – Qualcomm is targeting Nvidia’s deepest competitive moat: its proprietary CUDA software ecosystem.

In its press release, the multinational said it will issue up to 19.2 million common shares to absorb Modular’s developer-friendly, open software platform. 

But once the transaction closes later this year, developers will be able to build complex AI models once and instantly run them across multiple processor architectures, effectively “eliminating” the technical shackles that have historically tied the industry strictly to Nvidia’s hardware. 

Modular May Be the Catalyst Qualcomm Stock Needed

Long-term investors should consider loading up on Qualcomm shares today because the Modular news accelerates the giant’s independence from a stagnating smartphone sector. 

With memory shortages and growing in-house chip development from titans like Apple (AAPL) squeezing handset margins, diversifying into enterprise infrastructure is critical. 

Modular’s software is specifically engineered to optimize AI inference (the process of running live AI models) across CPUs, GPUs, and custom chips. 

BofA analysts expect this strategic pivot into data centers to unlock a new, highly lucrative revenue engine for QCOM, yielding an estimated $2 billion a year at least by fiscal 2027-2028. 

Note that the AI stock has a history of gaining more than 4.5% on average in July, a seasonal trend that makes it even more attractive to own in the near-term. 

How Wall Street Recommends Playing Qualcomm

Investors could also take heart in the fact that Wall Street hasn’t thrown in the towel on QCOM shares. 

While the consensus rating on Qualcomm Inc sits at “Hold” only, price targets go as high as $300, indicating potential upside of more than 50% from current levels.