Optional product analytics
With your permission, we use privacy-limited analytics to understand which research journeys work. We do not run advertising trackers or session replay. You can change this choice in Preferences. Read the Privacy Policy.
Bull: AI edge supercycle drives massive upgrade wave.
Accelerated loss of key OEM customers: Apple abruptly transitions entirely to internal modems faster than expected, while Samsung shifts premium mix to Exynos.
QCOM is a mature quality compounder dominating mobile connectivity. While near-term hardware revenue faces cyclical headwinds and the gradual loss of Apple as a modem customer, the QTL licensing segment provides strong cash flow, and automotive/IoT expansion offers durable new growth avenues. However, current valuation is completely detached from fundamental DCF realities.
QCOM is a mature quality compounder dominating mobile connectivity. While near-term hardware revenue faces cyclical headwinds and the gradual loss of Apple as a modem customer, the QTL licensing segment provides strong cash flow, and automotive/IoT expansion offers durable new growth avenues. However, current valuation is completely detached from fundamental DCF realities.
Edge AI upgrade super-cycle drives accelerated smartphone replacements and higher chip ASPs. Automotive and IoT segments scale rapidly.
SELL.
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 with connectivity and computing technologies for use in mobile devices; automotive systems for connectivity, digital cockpit, and ADAS/AD; and IoT, including consumer electronic devices, industrial devices, and edge networking 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 LTE, and/or OFDMA-based 5G products and derivatives; to use cellular standard-essential patents, including 3G, 4G and 5G for cellular devices. 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 sells related products to the United States government agencies and their contractors. In addition, the company is also involved in Qualcomm government technologies and data center businesses. QUALCOMM Incorporated was incorporated in 1985 and is headquartered in San Diego, California.
Under a recessionary handset cycle combined with accelerated Apple modem loss, QCT revenues contract structurally. High fixed R&D costs compress operating margins to the low 20s, dragging FCFF below $5B annually.
QTL licensing patent portfolio for 3G/4G/5G, dominant market share in premium mobile SoC (Snapdragon).
Economic profit is supported when reported returns exceed the company cost-of-capital hurdle.
Unavailable
FCFF DCF remains positive at the base case: base FCFF $5.7B after capex $1.8B, with terminal value at 51.1% of enterprise value. No FCF cliff is projected unless capex/ or materially resets.
If QTL revenue > $1.5B/qtr, core thesis holds. If QCT margins miss expectations due to pricing, revise fair value down.
If QTL revenue > $1.5B/qtr, core thesis holds. If QCT margins miss expectations due to pricing, revise fair value down.
If QTL revenue > $1.5B/qtr, core thesis holds. If QCT margins miss expectations due to pricing, revise fair value down.
High R&D intensity required to maintain leading-edge nodes and AI capabilities, though fabless model mitigates heavy capex.
Edge AI upgrade super-cycle drives accelerated smartphone replacements and higher chip ASPs. Automotive and IoT segments scale rapidly.
Lengthening handset replacement cycles, weak consumer spending, and fierce price competition in mid-tier chips.
High R&D intensity required to maintain leading-edge nodes and AI capabilities, though fabless model mitigates heavy capex.
Underweight or avoid at current valuation.
Take profits or trim exposure above $170 due to cyclical nature and structural risks from customer concentration.
Upside case depends on the report valuation range and named growth catalysts.
The market is pricing in an 11.9% implied growth rate, ignoring near-term cyclical headwinds and the looming loss of Apple.
Sell. The composite fair value midpoint of $136.11 indicates significant downside risk. Risk-reward is highly unfavorably skewed given the premium valuation against structural modem headwinds.
Reassess the thesis against the named valuation, risk, and quarterly checkpoint evidence in this report.
Capture your own thesis, position size, and follow-up questions. Stays on this device, only you can see it.
Severe recession stalls handset upgrades. MediaTek takes premium share. Regulatory pressures compress QTL margins.
Apple abruptly transitions entirely to internal modems faster than expected, while Samsung shifts premium mix to Exynos.
Global regulators cap licensing rates on 5G/6G patents or enforce device-level rather than component-level pricing.
AI PC and advanced smartphone AI features fail to drive premium pricing, reducing QCOM's ASP advantage.
The five developments that would weaken our investment case.
A decline in high-margin QTL patent licensing royalties sharply reduces Qualcomm's most profitable cash stream, compressing consolidated margins and limiting internal capital allocation flexibility.
Current:28.0% for the period ended 2025-09-30
Alert ifFalls below 22.0% over any two consecutive quarters
Gross margin compression reflects intense pricing competition in handset chipsets and rising foundry wafer costs, undermining the profitability of the core QCT semiconductor business.
Current:55.4% for the period ended 2025-09-30
Alert ifContracts below 50.0% across any trailing twelve-month period
An accelerated transition by Apple to proprietary modem chips would eliminate a major high-volume customer, stripping away billions in annual chip sales and impairing QCT scale.
Current:13.7% for the period ended 2025-09-30
Alert ifTurns negative below 0.0% over two consecutive fiscal quarters
Excess channel inventory accumulation and extended holding days tie up working capital and trigger inventory write-downs, dragging down cash generation during handset downcycles.
Current:2.529 as of 2026-05-08
Alert ifDrops below 1.50x on a trailing four-quarter basis
Failing to establish high-margin silicon leadership in AI PCs and automotive platforms leaves Qualcomm over-dependent on a mature smartphone market, capping long-term earnings growth potential.
Current:29.2% as of 2026-05-08
Alert ifDeclines below 20.0% across two consecutive fiscal years
Each lens answers a different valuation question. Only included lenses set Fair value; floors and diagnostics provide context.
Project SBC-adjusted EPS, discount each year's earnings at cost of equity, then add a Gordon-growth terminal value.
Project EPS through the explicit advantage period, fade growth as competition catches up, and discount the full stream at cost of equity.
Apply a terminal P/E to the dated forward EPS path, then discount that future share value back to the analysis date.
Convert the revenue and margin path into after-tax free cash flow, discount the annual per-share amounts and at , then adjust for signed per current share.
Add depreciation to net income, subtract maintenance capex, divide by diluted shares, and apply a normalized valuation multiple.
Multiply the peer median PEG by this stock's forecast growth to derive an implied forward P/E, then apply it to forward EPS.
Discount the explicit dividend path and its Gordon-growth terminal value at cost of equity.
Solve for the growth rate that makes the model value equal the report-date share price.
AI edge supercycle drives massive upgrade wave. Automotive and IoT become $10B+ businesses rapidly. Margins expand on premium mix.
Modest handset recovery offset by gradual Apple modem loss. Auto/IoT grow steadily. Margins normalize to historical averages.
If QTL revenue > $1.5B/qtr, core thesis holds. If QCT margins miss expectations due to pricing, revise fair value down.
Warning level: Falls below 22.0% over any two consecutive quarters. A decline in high-margin QTL patent licensing royalties sharply reduces Qualcomm's most profitable cash stream, compressing consolidated margins and limiting internal capital allocation flexibility.
Warning level: Contracts below 50.0% across any trailing twelve-month period. Gross margin compression reflects intense pricing competition in handset chipsets and rising foundry wafer costs, undermining the profitability of the core QCT semiconductor business.
Warning level: Turns negative below 0.0% over two consecutive fiscal quarters. An accelerated transition by Apple to proprietary modem chips would eliminate a major high-volume customer, stripping away billions in annual chip sales and impairing QCT scale.
Warning level: Drops below 1.50x on a trailing four-quarter basis. Excess channel inventory accumulation and extended holding days tie up working capital and trigger inventory write-downs, dragging down cash generation during handset downcycles.
Warning level: Declines below 20.0% across two consecutive fiscal years. Failing to establish high-margin silicon leadership in AI PCs and automotive platforms leaves Qualcomm over-dependent on a mature smartphone market, capping long-term earnings growth potential.
| $35.82B |
| $38.96B |
| $44.28B |
| +0.1% |
| Gross profit | $25.57B | $19.95B | $21.90B | $24.55B | -1.3% |
| Operating income | $15.49B | $8.14B | $11.03B | $13.33B | -4.9% |
| Net income | $12.94B | $7.23B | $10.14B | $5.54B | -24.6% |
| EPS (diluted) | $11.37 | $6.42 | $8.97 | $5.01 | -23.9% |
| EBITDA | $17.25B | $9.95B | $12.74B | $14.93B | -4.7% |
| R&D | $8.19B | $8.82B | $8.89B | $9.04B | +3.3% |
| SG&A | $2.57B | $2.48B | $2.76B | $3.11B | +6.6% |
Capital allocation should be evaluated against reinvestment needs, balance-sheet strength, and shareholder returns.
| Revenue | 44,284,000,000 |
|---|---|
| Cost of revenue | 19,738,000,000 |
| Gross profit | 24,546,000,000 |
| Operating expenses | 12,152,000,000 |
| Operating income | 12,394,000,000 |
| Non-operating items and tax | -6,853,000,000 |
| Net income | 5,541,000,000 |
| Total assets | 50,143,000,000 |
|---|---|
| Cash | 5,520,000,000 |
| Current assets | 25,754,000,000 |
| Total liabilities | 28,937,000,000 |
| Current liabilities | 9,144,000,000 |
| Shareholders’ equity | 21,206,000,000 |
Point-in-time financial data used in the 2026-05-08 analysis.
| Period | Revenue | EBITDA | Net income | Operating cash flow | Free cash flow | Capex | Depreciation and amortization | Stock-based compensation | Share repurchases | Dividends paid | Net debt issuance | Investing cash flow | Financing cash flow | Beginning cash | Ending cash | Cash and investments | Total debt | Operating margin | ROIC | WACC | ROIC − WACC spread |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022-09-30 | 44.2B | 17.3B | 12.9B | 9.1B | 6.8B | 2.3B | 1.8B | 2B | 3.1B | 3.2B | -415M | — | — | — | — | 2.8B | 15.5B | 35.9% | — | 9.0% | — |
| 2023-09-30 | 35.8B | 9.9B | 7.2B | 11.3B | 9.8B | 1.5B | 1.8B | 2.5B | 3B | 3.5B | -64M | — | — | — | — | 8.5B | 15.4B | 24.1% | — | 9.9% | — |
| 2024-09-30 | 39B | 12.7B | 10.1B | 12.2B | 11.2B | 1B | 1.7B | 2.6B | 4.1B | 3.7B | -914M | — | — | — | — | 7.8B | 14.6B | 26.3% | — | 9.3% | — |
| 2025-09-30 | 44.3B | 14.9B | 5.5B | 14B | 12.8B | 1.2B | 1.6B | 2.8B | 8.8B | 3.8B | 122M | — | — | — | — | 5.5B | 14.8B | 28.0% | — | 10.1% | — |
QCOM trades at 20.7x forward earnings against a peer median of 22.8x; EV/EBITDA of 16.8x against a peer median of 40.7x; 6 peers.
| Wait for cyclical pullback below $135 to build long-term position with margin of safety. |
| Broadcom Inc. |
| 22.8x |
| 28.6x |
| 55.5x |
| 33.4% |
| 44.9% |
| MU | Micron Technology Inc. | 6.4x | 12.5x | 19.7x | 39.8% | 67.6% |
| AMD | Advanced Micro Devices Inc. | 34.4x | 19.3x | 88.5x | 8.1% | 14.4% |
| INTC | Intel Corporation | 83.1x | 11.9x | 40.7x | -2.9% | 6.9% |
