Qualcomm (QCOM.O) took a relatively long time to join the AI boom, but its stock price has been soaring this year. With CFRA Research upgrading Qualcomm's stock rating, the chip maker has won another fan on Wall Street.

As of Tuesday's close, Qualcomm's stock has risen 57% year-to-date to reach $227.09. Concerns about weakness in the smart phone market have been replaced by optimism about the integration of AI into mobile devices and the company's foray into the personal computer processor market.

CFRA analyst Angelo Zino also supports this trend. In a research report on Tuesday, he upgraded Qualcomm's rating from hold to buy and raised his target price from $200 to $260.

This target is based on his estimated PE ratio of about 22 times Qualcomm's earnings forecast for 2025, which he notes is higher than the company's historical ratio.

"We believe that in the next 12 months, as AI shifts to the device level, Qualcomm will be a major beneficiary of this transformation and could significantly drive upside to our estimates," Zino wrote.

Qualcomm is a leader in providing AI-enabled smart phone features - it supplies chips for Samsung's flagship S24 Ultra and a range of high-end devices made by Chinese manufacturers. While Apple (AAPL.O) plans to rely on its own chips for AI functionality, Qualcomm will still benefit from the expected increase in sales of the next generation of iPhones as it provides modem chips that connect devices to wireless carriers.

"In the smart phone space, we see higher growth driven by better than expected refresh cycles for the iPhone 16, content additions to future Samsung devices and improving trends with Chinese suppliers. Additionally, we are bullish about Qualcomm's growing potential market opportunity as AI-based personal computers become more popular on Windows," Zino wrote.

Qualcomm is launching AI-enabled personal computer processors to compete with veteran companies Intel (INTC.O) and AMD (AMD.O). Last month, this effort received a major boost when Microsoft announced that its new series of tablets and laptops running AI software will be powered by Qualcomm Snapdragon chips.

A potential obstacle to Qualcomm's extension into personal computers is its ongoing legal dispute with chip design company Arm (ARM.O).

This dispute began after Qualcomm's 2021 acquisition of chip company Nuvia. Arm claims that Nuvia's chips rely on Arm's designs and were not authorized for transfer. Qualcomm argues that its broad Arm technology license already covers its personal computer chips. Qualcomm currently has an exclusive license to produce Arm chips that run Microsoft Windows, but this arrangement is expected to expire later this year.