Reviewing Qualcomm (NASDAQ:QCOM) and ARM (NASDAQ:ARM)

ARM (NASDAQ:ARM) and Qualcomm (NASDAQ:QCOM) are both large-cap technology companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, analyst recommendations and risk.

Analyst Ratings

This is a summary of current recommendations and price targets for ARM and Qualcomm, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARM	1	7	18	0	2.65
Qualcomm	3	21	13	3	2.40

ARM presently has a consensus price target of $296.38, suggesting a potential upside of 47.88%. Qualcomm has a consensus price target of $197.13, suggesting a potential upside of 11.34%. Given ARM’s stronger consensus rating and higher probable upside, research analysts clearly believe ARM is more favorable than Qualcomm.

Insider & Institutional Ownership

7.5% of ARM shares are held by institutional investors. Comparatively, 74.3% of Qualcomm shares are held by institutional investors. 0.1% of Qualcomm shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

ARM has a beta of 3.93, indicating that its share price is 293% more volatile than the S&P 500. Comparatively, Qualcomm has a beta of 1.7, indicating that its share price is 70% more volatile than the S&P 500.

Profitability

This table compares ARM and Qualcomm’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ARM	17.13%	11.57%	8.99%
Qualcomm	31.60%	30.62%	14.53%

Valuation & Earnings

This table compares ARM and Qualcomm”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARM	$5.46 billion	39.18	$904.00 million	$0.87	230.37
Qualcomm	$43.12 billion	4.39	$13.63 billion	$12.70	13.94

Qualcomm has higher revenue and earnings than ARM. Qualcomm is trading at a lower price-to-earnings ratio than ARM, indicating that it is currently the more affordable of the two stocks.

Summary

Qualcomm beats ARM on 9 of the 15 factors compared between the two stocks.

About ARM

Arm Holdings plc designs and licenses semiconductor technology, including processor architectures and related intellectual property. Rather than manufacturing chips, the company licenses its designs and collects royalties on products that use them. Arm’s offerings include Cortex CPUs, Mali graphics processors, Neoverse infrastructure platforms and other technology for applications ranging from smartphones and consumer electronics to automotive systems, the Internet of Things and cloud computing.

About Qualcomm

Qualcomm Incorporated is a technology company that develops wireless communications technologies and semiconductor products. Its chips and related systems are used in smartphones and other connected devices, with products spanning mobile processors, modem-radio frequency systems, and connectivity solutions. The Snapdragon brand includes platforms for mobile devices as well as computing, automotive, and extended-reality applications. Qualcomm also develops technology for automotive systems and the Internet of Things, including connectivity and processing solutions for vehicles, industrial equipment, and consumer devices.