Reviewing QUALCOMM (NASDAQ:QCOM) and Applied Materials (NASDAQ:AMAT)

Applied Materials (NASDAQ:AMAT) and QUALCOMM (NASDAQ:QCOM) are both large-cap computer and technology companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, dividends, valuation, institutional ownership, profitability, risk and analyst recommendations.

Volatility and Risk

Applied Materials has a beta of 1.84, meaning that its stock price is 84% more volatile than the S&P 500. Comparatively, QUALCOMM has a beta of 1.26, meaning that its stock price is 26% more volatile than the S&P 500.

Dividends

Applied Materials pays an annual dividend of $1.84 per share and has a dividend yield of 0.8%. QUALCOMM pays an annual dividend of $3.56 per share and has a dividend yield of 2.0%. Applied Materials pays out 21.2% of its earnings in the form of a dividend. QUALCOMM pays out 72.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Applied Materials has increased its dividend for 8 consecutive years and QUALCOMM has increased its dividend for 23 consecutive years. QUALCOMM is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

80.6% of Applied Materials shares are owned by institutional investors. Comparatively, 74.3% of QUALCOMM shares are owned by institutional investors. 0.2% of Applied Materials shares are owned by company insiders. Comparatively, 0.1% of QUALCOMM shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Applied Materials and QUALCOMM’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Applied Materials	23.88%	40.96%	22.99%
QUALCOMM	26.77%	40.35%	19.74%

Valuation & Earnings

This table compares Applied Materials and QUALCOMM”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Applied Materials	$28.61 billion	6.29	$7.18 billion	$8.68	26.04
QUALCOMM	$44.28 billion	4.21	$10.14 billion	$4.89	35.58

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

Analyst Ratings

This is a summary of recent recommendations and price targets for Applied Materials and QUALCOMM, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Applied Materials	1	13	19	0	2.55
QUALCOMM	1	9	13	1	2.58

Applied Materials presently has a consensus target price of $226.74, suggesting a potential upside of 0.32%. QUALCOMM has a consensus target price of $190.38, suggesting a potential upside of 9.43%. Given QUALCOMM’s stronger consensus rating and higher probable upside, analysts plainly believe QUALCOMM is more favorable than Applied Materials.

Summary

Applied Materials beats QUALCOMM on 10 of the 18 factors compared between the two stocks.

About Applied Materials

Applied Materials, Inc. engages in the provision of manufacturing equipment, services, and software to the semiconductor, display, and related industries. The company operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment develops, manufactures, and sells various manufacturing equipment that is used to fabricate semiconductor chips or integrated circuits. This segment also offers various technologies, including epitaxy, ion implantation, oxidation/nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching, and selective deposition and removal, as well as metrology and inspection tools. The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity comprising spares, upgrades, services, remanufactured earlier generation equipment, and factory automation software for semiconductor, display, and other products. The Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays; organic light-emitting diodes; and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smart phones, and other consumer-oriented devices. It operates in the United States, China, Korea, Taiwan, Japan, Southeast Asia, and Europe. The company was incorporated in 1967 and is headquartered in Santa Clara, California.

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.