Analyzing Qualcomm (NASDAQ:QCOM) and AXT (NASDAQ:AXTI)

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

Valuation and Earnings

This table compares Qualcomm and AXT”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Qualcomm	$44.87 billion	3.22	$5.54 billion	$4.84	28.01
AXT	$88.33 million	47.17	-$21.26 million	($0.48)	-156.19

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

Institutional and Insider Ownership

74.3% of Qualcomm shares are owned by institutional investors. Comparatively, 49.5% of AXT shares are owned by institutional investors. 0.1% of Qualcomm shares are owned by company insiders. Comparatively, 6.0% of AXT shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Qualcomm has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500. Comparatively, AXT has a beta of 1.51, meaning that its share price is 51% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Qualcomm and AXT, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Qualcomm	3	13	9	1	2.31
AXT	1	2	2	0	2.20

Qualcomm presently has a consensus target price of $159.48, suggesting a potential upside of 17.64%. AXT has a consensus target price of $22.80, suggesting a potential downside of 69.59%. Given Qualcomm’s stronger consensus rating and higher possible upside, research analysts clearly believe Qualcomm is more favorable than AXT.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Qualcomm	11.96%	44.09%	20.50%
AXT	-24.07%	-9.50%	-5.95%

Summary

Qualcomm beats AXT on 12 of the 15 factors compared between the two stocks.

About Qualcomm

Qualcomm Incorporated engages in the development and commercialization of foundational technologies for the wireless industry worldwide. It operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI). The QCT segment develops and supplies integrated circuits and system software based on 3G/4G/5G and other technologies for use in wireless voice and data communications, networking, computing, multimedia, and position location products. The QTL segment grants licenses or provides rights to use portions of its intellectual property portfolio, which include various patent rights useful in the manufacture and sale of wireless products comprising products implementing CDMA2000, WCDMA, LTE and/or OFDMA-based 5G standards and their derivatives. The QSI segment invests in early-stage companies in various industries, including 5G, artificial intelligence, automotive, consumer, enterprise, cloud, IoT, and extended reality, and investments, including non-marketable equity securities and, to a lesser extent, marketable equity securities, and convertible debt instruments. It also provides development, and other services and related products to the United States government agencies and their contractors. The company was incorporated in 1985 and is headquartered in San Diego, California.

About AXT

AXT, Inc. designs, develops, manufactures, and distributes compound and single element semiconductor substrates. The company offers indium phosphide for use in data center connectivity using light/lasers, high-speed data transfer in data centers, 5G communications, fiber optic lasers and detectors, consumer devices, passive optical networks, silicon photonics, photonic integrated circuits, thermo-photovoltaics, RF amplifier and switching, infrared light-emitting diode (LEDS) motion control, lidar for robotics and autonomous vehicles, and infrared thermal imaging. It also provides semi-insulating gallium arsenide (GaAs) substrates for use in Wi-Fi and IoT devices, transistors, direct broadcast television, power amplifiers, satellite communications, and solar cells; and semi-conducting GaAs substrates that are used in LEDs, screen displays using micro-LEDs, printer head lasers and LEDs, 3-D sensing using VCSELs, data center communication using VCSELs, sensors for industrial robotics/near-infrared sensors, optical couplers, solar cells, night vision goggles, lidar for robotics and autonomous vehicles, and other lasers, as well as laser machining, cutting, and drilling. In addition, the company offers germanium substrates for use in multi-junction solar cells for satellites, optical sensors and detectors, terrestrial concentrated photo voltaic cells, infrared detectors, and carrier wafer for LED. Further, it provides 6N+ and 7N+ purified gallium, boron trioxide, gallium-magnesium alloy, pyrolytic boron nitride (pBN) crucibles, and pBN insulating parts. It sells its products through direct salesforce in the United States, China, and Europe, as well as through independent sales representatives and distributors in Japan, Taiwan, Korea, and internationally. The company was formerly known as American Xtal Technology, Inc. and changed its name to AXT, Inc. in July 2000. AXT, Inc. was incorporated in 1986 and is headquartered in Fremont, California.