In recent years, investors have largely overlooked Qualcomm (QCOM 1.38%) stock. The leader in smartphone chipsets faced declining revenues after the 5G upgrade cycle ran its course, and the demand for AI-enabled phones has so far not fostered a comparable growth cycle.

Plus, Apple is on track to drop Qualcomm as a chipset provider in 2027, and the company's heavy exposure to China has weighed on the stock.

Still, despite those challenges, investors may be overlooking a compelling reason to buy this value stock. Here's why.

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Why investors should expect a Qualcomm comeback

In short, the reason to buy Qualcomm is its emerging business lines.

Indeed, struggles in the smartphone chipset business could continue. However, Qualcomm has long anticipated a day when smartphones would become less critical. It has expanded into new business lines, including IoT, automotive, and more recently, the PC business. It also plans to design custom processors that will integrate with Nvidia's AI chips.

These moves are showing early signs of success. Although revenue growth was 17% year-over-year in the first half of fiscal 2025 (ended March 30), IoT revenue grew 31% during that period, and automotive revenue surged 60%. This is far above the 12% increase in the handset chip sales that still drive most of the company's revenue.

What's more, Qualcomm's costs and expenses grew at levels closely approximating revenue growth. Still, its $6 billion in net income in the first two quarters of fiscal 2025 rose by 18%, indicating the company's chip businesses are in an up-cycle. Although Qualcomm did not report numbers on its PC business, it expects to generate $4 billion in annual revenue from that business by fiscal 2029.

Finally, despite double-digit profit growth, Qualcomm stock sells at a P/E ratio of 16. This indicates that investors have largely ignored the growth potential of this chip giant. However, with the rapid growth in Qualcomm's newer business lines, investors may want to take advantage of the low P/E ratio before more investors take notice.