Where smart investors are putting money in right now

As geopolitical tensions rise and global supply chains change, investors around the world are focusing on one of today’s most important industries: semiconductors. China is working hard to become self-sufficient in chip technology, but the US is trying to prevent the export of advanced chips to maintain its technical advantages. All this is happening while AI is rapidly advancing.

These factors are rapidly moving for investors and creating dangerous, but potentially beneficial markets. Amidst the chaos, savvy investors prefer long-term stability against distractions. Here are two stocks that show true innovation and resilience:

Valued at $174.4 billion, Qualcomm (QCOM) develops and sells advanced semiconductor and wireless technologies primarily for mobile phones, automotive systems, Internet of Things devices and AI applications. It is best known for its Snapdragon processors.

QCOM stocks have grown by 3% since the start of the year.

Qualcomm’s robust second quarter showed the strength of its business model. Qualcomm showed 17% growth in adjusted revenues, up 15% to $10.8 billion year-on-year with adjusted profit of $2.85. Much of this strength came from the company’s chip business, Qualcomm CDMA Technologies (QCT) segment, which generated $9.5 billion. This was driven by strong growth in automobiles (up 59%), IoT (up 27%), and mobile phones (up 12%). The Qualcomm Technology License (QTL) license business has contributed an additional $1.3 billion to its overall revenue.

Qualcomm continues to dominate the premium mobile market with its Snapdragon 8 elite platform. It is considered one of the most powerful smartphone chipsets in the world. The Snapdragon X platform has also expanded rapidly to the PC market, surpassing its 100 design target by 2026. Beyond mobile, Qualcomm will actively expand its Snapdragon Digital Chassis platform, bringing the Snapdragon Digital Chassis platform to $8 billion in fiscal 2029 auto revenue. (Meta) and Samsung. The company plans to generate $2 billion in XR revenue by fiscal 2029.

Qualcomm returned $2.7 billion to shareholders through dividends and buybacks, showing strong confidence in generating and managing free cash flow. The company also promises to return 100% of its free cash flow for this fiscal year to shareholders, citing a strong basics and scalable model.

When it comes to China, Qualcomm remains a key player in China’s smartphone ecosystem, with local subsidies increasing flagship shipments. Management said the company’s third quarter guidance takes into account current tariffs and acknowledges the trade environment as dynamic. Qualcomm is also taking steps to diversify business geographically and across sectors to reduce reliance on a single region or product category.

Overall, Wall Street rates QCOM stock as “medium purchases.” Of the 32 analysts covering stocks, 15 rated as “strong buy”, suggesting “medium buy”, 15 rated as “hold”, and 1 rated as “strong sell”. The average target price of $179.04 suggests a 13% increase from current levels. A high price target of $225 means a potential 42% increase over the next 12 months.

Valued at $1.3 trillion, Broadcom (AVGO) designs, develops and distributes a wide range of semiconductor and infrastructure software products. Its diverse portfolio includes networking chips, enterprise storage, broadband and wireless communications. Broadcom also offers enterprise software solutions for cybersecurity, storage and mainframes.

AVGO stocks are up 24.8% per year, surpassing the broader market.

Broadcom reported a staggering $15 billion in revenue in the second quarter, up 20% year-on-year. AI semiconductor revenues rose 46% to $4.4 billion, marking consistent growth for the nine consecutive quarter. This growth was driven by custom AI accelerators (chips designed for specific hyperscalar clients) and AI networking, which account for 40% of AI semiconductor revenue. Management confidently forecasts AI revenue growth of 60% for the third quarter of 2025.

What’s more, the software is no longer a Broadcom side hustle. Strategic acquisitions such as VMware have strengthened the software’s position through a $69 billion strategic acquisition officially shut down in 2024. Its infrastructure software segment grew 25%, generating $6.6 billion in revenue, accounting for 44% of the company’s total revenue. Currently, over 87% of Broadcom’s top 10,000 customers use VMware Cloud Foundation (VCF).

Additionally, the company converts its customers from perpetual licenses to subscription-based ARRs, resulting in more predictable revenue. Looking ahead, major cloud players continue to invest, with increased training demand and inference workloads, strong software adoption, and a positive long-term outlook.

Broadcom is growing not only rapidly, but also beneficially. Adjusted revenues rose 44% per share in the second quarter to $1.58. The company also generated $6.4 billion in free cash flow, paying $2.8 billion in dividends and $4.2 billion worth of stock buybacks.

Despite rising technological tensions between the US and China, Broadcom is well suited to thrive. It does not rely heavily on high-end GPUs with export restrictions.

Overall, Wall Street stocks AVGO stock in “Strong Buy”. Of the 36 analysts covering stocks, 32 are rated as “strong buys”, suggesting “medium buys”, and three rated as “hold.” The average target price of $298.55 suggests a 3% increase from current levels. A high price target of $400 means a potential 38% increase over the next 12 months.

There is no doubt that the chip war between the US and China poses major challenges. Export controls, alliance shifts, and technology bans can all lead to short-term turbulence. However, the best way to profit from the semiconductor boom is to invest in a company that can adapt, endure and grow during uncertain times. Both Qualcomm and Broadcom serve this purpose.

On the date of publication, Sushree Mohanty had no position (directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published barchart.com