Critical Review: Tower Semiconductor (NASDAQ:TSEM) & QUALCOMM (NASDAQ:QCOM)

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

Institutional & Insider Ownership

74.4% of QUALCOMM shares are owned by institutional investors. Comparatively, 70.5% of Tower Semiconductor shares are owned by institutional investors. 0.1% of QUALCOMM shares are owned by company insiders. Comparatively, 1.0% of Tower Semiconductor shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares QUALCOMM and Tower Semiconductor”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
QUALCOMM	$44.28 billion	4.21	$5.54 billion	$4.89	35.63
Tower Semiconductor	$1.44 billion	9.13	$207.86 million	$1.72	68.81

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

Volatility and Risk

QUALCOMM has a beta of 1.22, suggesting that its stock price is 22% more volatile than the S&P 500. Comparatively, Tower Semiconductor has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for QUALCOMM and Tower Semiconductor, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
QUALCOMM	1	7	13	0	2.57
Tower Semiconductor	0	2	3	0	2.60

QUALCOMM currently has a consensus price target of $192.94, suggesting a potential upside of 10.75%. Tower Semiconductor has a consensus price target of $119.25, suggesting a potential upside of 0.76%. Given QUALCOMM’s higher probable upside, equities research analysts plainly believe QUALCOMM is more favorable than Tower Semiconductor.

Profitability

This table compares QUALCOMM and Tower Semiconductor’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
QUALCOMM	12.51%	43.22%	20.62%
Tower Semiconductor	12.92%	7.16%	6.20%

Summary

QUALCOMM beats Tower Semiconductor on 9 of the 14 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 Tower Semiconductor

Tower Semiconductor Ltd., an independent semiconductor foundry, focus on specialty process technologies to manufacture analog intensive mixed-signal semiconductor devices in Israel, the United States, Japan, Europe, and internationally. It provides various customizable process technologies, including SiGe, BiCMOS, mixed signal/CMOS, RF CMOS, CMOS image sensor, integrated power management, and MEMS. The Company also provides design enablement platform for quick and accurate design cycle, as well as transfer optimization and development process services to integrated device manufacturers and fabless companies. It serves various markets, such as consumer electronics, personal computers, communications, automotive, industrial, aerospace, military, and medical device products. The company was incorporated in 1993 and is headquartered in Migdal Haemek, Israel.