Masayoshi Son recently made a significant assertion regarding investors' perception of Nvidia's future opportunities in the AI market. In his view, there is a notable gap where the market is not adequately pricing in Nvidia's potential. This claim holds great weight as it pertains to one of the most critical elements powering artificial intelligence - semiconductors.

Uncover the Hidden Gems in the Chip Space

Semiconductors: The Backbone of AI

In my eyes, semiconductors stand as the fundamental infrastructure underpinning artificial intelligence. From storage to memory, quantum computing, and various generative AI applications, semiconductors serve as the backbone that enables the broader AI thesis. Over the past few years, following chipmakers closely, it becomes evident that Nvidia (NVDA -1.82%) has emerged as a dominant force in the AI realm. Despite its shares surging by an astonishing 752% in just the last two years, renowned investor Masayoshi Son of SoftBank has proclaimed that Nvidia stock is undervalued. His reasoning lies in the expected robust growth of the total addressable market (TAM) for generative AI in the coming years. Nvidia's industry-leading roster of graphics processing units (GPU) architecture gives it a significant edge over its competitors, potentially enabling it to capture a substantial portion of the incremental market share that Son projects. If this scenario unfolds, Nvidia stock appears to be a highly attractive investment.However, I am not allowing Nvidia's dominance to overshadow other opportunities in the chip space. Below, I will detail why I believe Qualcomm (QCOM -6.30%) presents an alternative investment option and is a better opportunity at present.

Qualcomm: Quietly Emerging as an AI Star

Although Qualcomm is a semiconductor company, its business model differs significantly from that of Nvidia. While Nvidia focuses on manufacturing GPUs for generative AI development, Qualcomm's Snapdragon architecture is primarily designed to power mobile phones and Internet of Things (IoT) devices. In the fiscal year ended Sept. 29, Qualcomm generated $38.9 billion in revenue, showing a modest 9% year-over-year growth. It's important to note that Qualcomm has been in turnaround mode for the past several quarters, with efforts focused on cost-cutting and revitalizing its core handset business.In my assessment, Qualcomm's efforts are starting to bear fruit. During the first half of fiscal 2024, revenue growth was in the low single digits. However, in the second half, the company demonstrated an impressive turnaround, with sales rising by 11% in the third quarter and 19% in the fourth quarter. Additionally, Qualcomm's net income and earnings per share (EPS) both increased by 40% year over year in fiscal 2024. This level of profitability growth is highly appealing, and it raises the question of how Qualcomm will allocate its newfound profits.

15 Billion Reasons to Love Qualcomm Stock Right Now

As part of its recent earnings report, Qualcomm's management announced the approval of a $15 billion stock buyback program. This move is highly significant as it provides an enticing way for the company to deploy its excess cash flow and reward shareholders. The $15 billion share repurchase program adds another layer of value to Qualcomm's stock.When we look at the valuation of Qualcomm compared to its peers using the forward price-to-earnings (P/E) multiple, an interesting picture emerges. With a forward P/E of just 14.3, investors seem to be undervaluing Qualcomm's growth prospects when compared to many of its counterparts. This valuation disparity, combined with the new share repurchase program, suggests that Qualcomm's management believes the stock is undervalued.While Son's assessment of Nvidia's potential may be accurate, I firmly believe that Qualcomm stock presents a more compelling opportunity at present. Given its valuation relative to peers and the potential for future growth, Qualcomm is trading at a bargain. For investors with a long-term time horizon, Qualcomm stock is a no-brainer.Adam Spatacco has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and recommends the following options: short November 2024 $24 calls on Intel. The Motley Fool has a disclosure policy.