The smartphone boom of the 2010s is getting a second wind with the 5G upgrade cycle. However, “mobile computing” is taking on a new meaning, and big changes are coming to the PC world as a result. In its latest earnings update, the mobile chip leader Qualcomm (QCOM -0.95%) mentioned Project Volterra, a collaboration with Microsoft (MSFT 1.57%) announced earlier in 2022.
Maybe you missed this development. It received little media coverage or fanfare. But that could be a really big deal, and it’s one of the main reasons why Qualcomm could be a monster stock in the years to come.
What is the Volterra project?
Amid its busy Build 2022 conference in May, Microsoft unveiled a new computing device dubbed Project Volterra. The hardware will be available as a dev kit later in 2022 and was built by none other than Qualcomm using its Snapdragon mobile platform. Project Volterra specs include Qualcomm’s neural processing chips to help accelerate AI development.
Let’s break it all down in simple terms. Basically, Microsoft’s Project Volterra is a new kind of PC available to engineers and software developers, with a commercial launch expected by the end of 2023. What’s special about these new PCs? The intention is to bring the features that consumers love on their smartphones and tablets and apply them to desktops and laptops. Think mobile apps, powerful computing performance, and ultra-efficient power consumption.
This may sound familiar to you. He is. That’s basically what Apple has done with its M-series chips for its Mac computers, to rave reviews. Essentially, the same experience on an iPhone can now be had (in a larger format, of course) via a Mac. Apple succeeded by pressing ARM (it’s the chip design licensor Nvidia was trying to acquire) to oversize its iPhone processors for its computers. Basically, we are seeing the convergence of the mobile and traditional PC worlds.
Microsoft, the leader in PC operating systems, had to react. And who better to help than Qualcomm? Qualcomm’s silicon is present throughout the Android ecosystem (it is the leader in operating systems for smartphones and tablets, led by Alphabet. Its efficient and powerful chips combine processor and graphics with new circuitry capable of handling on-device AI. It’s time to supersize these designs so PCs can catch up to Apple. If all goes as planned, consumers will have a new personal computer option to choose from next year that will bridge the gap between traditional PCs and the efficient user experience of Android smartphones and tablets.
How big could this be for Qualcomm?
Ok, so there are a lot of moving parts here, but suffice it to say this could be a really big deal for Qualcomm. This project had been brewing for years. In fact, the company acquired an ARM-based chip design startup called NUVIA in early 2021 to help accelerate those efforts. Along the way, Qualcomm has made a bit of progress and started showing up in some 2-in-1 laptops (like the Microsoft Surface, which is basically a laptop that turns into a tablet).
However, for those interested in the computing power that comes with a more traditional PC or laptop, processor choices basically start and end with Intel and Advanced micro-systems. And if you’re looking for high-end graphics (for gaming or professional visualization work), those same desktops and laptops almost certainly come with an AMD or Nvidia GPU (graphics processing unit).
Could Qualcomm become a new leading alternative on this front? That certainly could be the case, especially if the company’s PC-friendly mobile designs deliver some of the levels of performance that Apple’s M-series chips for Mac have shown. And between the Intel-AMD-Nvidia trifecta of CPU and GPU dominance on PC, there are tens of billions of dollars in annual spending up for grabs. Even for a chip giant like Qualcomm, getting some of that business back would be important. No wonder Nvidia wanted to avoid this with the attempted (but failed) acquisition of ARM. He wanted a cut from the coming pivot in PC hardware technology by getting his hands on ARM’s designs – the very designs that Apple and Qualcomm are using to lead the revolution.
Of course, any financial outcome of this development is a long way off for Qualcomm. For now, the mobile upgrade cycle to 5G is what propels the company higher. But for the smartest shareholders looking for the sequel to Qualcomm’s saga, the convergence of PC with mobile certainly could be it.
Suzanne Frey, an executive at Alphabet, is a board member of The Motley Fool. Nicholas Rossolillo and his clients hold positions at Advanced Micro Devices, Alphabet (C-shares), Apple, Nvidia and Qualcomm. The Motley Fool owns and recommends Advanced Micro Devices, Alphabet (A shares), Alphabet (C shares), Apple, Intel, Microsoft, Nvidia and Qualcomm. The Motley Fool recommends the following options: $57.50 Long Calls January 2023 on Intel, $120 Long Calls March 2023 on Apple, $57.50 Short Calls January 2023 on Intel and Short Calls $130 from March 2023 on Apple. The Motley Fool has a disclosure policy.