QUALCOMM INC/DE (QCOM): what the price requires

At today's price, QUALCOMM INC/DE (QCOM) is priced for +20.3% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-13 · Source: https://boothcheck.com/report/QCOM

Headline

FieldValue
TickerQCOM
CompanyQUALCOMM INC/DE
Current price$183.23/sh
CompositionQCT 87% / QTL 13% / QSI 0% / Nonreportable segments 0% / Unallocated revenues 0%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed12.5%
Operating margin today26.2%
Margin compression implied-13.7pp
Implied growth20.3%
Multiple paid17x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 11.3% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~4.7pp.

Reconcile: at the x-ray's 9.3% required return this reads ~10.1%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history+0.30σ
cohort percentile (of 177 peers)26
sustained it ~5 years at this level42%
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.74x5expensive
Earnings1.75x5expensive
Relative0.74x3justifies
Growth0.78x3justifies

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.7%); the inversion above states its own rate.

Per-Model Detail (n=16)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$306.670.60xyesFCF base $12.8B, growth 5% (input: historical growth), terminal g 4.0%, WACC 8.6%, 5yr projection
DCF Exit MultipleGrowth$234.840.78xyesExit EV/EBITDA: 15.6x / 17.6x / 19.6x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$248.920.74xyesP/E 28x (sector median), scenarios: 23.5x / 28.0x / 32.5x (bear / base = sector held flat / bull), EV/EBITDA 20x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$105.321.74xyesBV/sh $25.45, ROE (TTM) 38.3%, ke 9.3%
Two-Stage Excess ReturnAsset$234.820.78xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$168.951.08xyesRev $44.5B, growth 5% (input: historical growth; tapered), Terminal P/S: 3.7x / 4.4x / 5.1x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$104.961.75xyesNormalized EBIT (5y avg op income, one-time charges added back) $11.42B × (1−21%) / WACC 8.6% → EPV (no growth)
Residual IncomeAsset$165.931.10xyesBV $25.45 + 5yr PV of (ROE (TTM) 38.3% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$74.382.46xyes√(22.5 × EPS $9.66 × BVPS $25.45) — Graham's conservative floor
EV/EBITDA RelativeRelative$210.000.87xyesEBITDA $11.75B × sector EV/EBITDA 20.0x
FCF YieldEarnings$116.901.57xyesFCF $12502.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$85.932.13xyesSBC-adj FCF $9.43B (FCF $12.50B − SBC $3.07B) capitalized at Kₑ
Ben Graham FormulaEarnings$39.374.65xyesEPS $9.66 × (8.5 + 2×-1.8%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$14.4612.67xyesBV $25.45 × (ROIC 4.9% / WACC 8.6%)
P/Sales SectorRelative$248.990.74xyesRevenue $44.49B × sector P/S 6.0x
PEG Fair ValueRelative——no—
Earnings YieldEarnings$104.471.75xyesEPS $9.66 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$5.5b
Net debt / NOPAT (after-tax)0.60x
Net debt / operating income (pre-tax)0.48x
Interest coverage17.2x
Share count CAGR (buyback)-1.5%
Burning cashno

Bullet Takeaways

At $227.29 (as of June 27, 2026) the market pays roughly 21x company-wide operating income, a level that needs operating profit to compound near 29% a year for five years. That is within the pace Qualcomm has recently hit; the stretch is in how long it must hold, not the starting speed.

The valuation methods split cleanly. The forward-growth family (perpetual-growth DCF near $299, exit-multiple DCF near $275) and the discounted future market cap near $210 reach today's price. The earnings-power and asset families do not: earnings power lands near $104, FCF-based value near $117, and book-anchored excess return near $105. The price is a bet on the growth lever, not on current earnings or book.

The business is profitable and well financed. Trailing operating income is about $11.4 billion, interest coverage is roughly 17x, net debt sits near $5.5 billion, and trailing ROE is about 38%. Cash quality is not the question here. The question is whether the non-handset businesses scale fast enough to outrun the Apple modem loss now scheduled to bite by 2027.

Bull Case

Look at the direction the numbers have been moving and the bull case writes itself in trajectory rather than in any single multiple. Q2 fiscal 2026 revenue came in around $10.6 billion with adjusted earnings of $2.65 a share, ahead of the roughly $2.56 the Street expected, and the stock moved up double digits on the print. The point is not the beat itself but where the growth is now coming from. Automotive revenue reached about $1.1 billion in the prior quarter, up roughly 15% year over year, and the internet-of-things line is running near $1.7 billion. The company has raised its fiscal 2029 non-handset revenue target to about $40 billion, close to double the prior goal. That is the lever the price is leaning on, and management is widening it rather than defending it.

The business still earns its keep on the licensing side, which is the highest-margin part of the company and the part least exposed to a single customer. Qualcomm's own filing is blunt about the chipset mix risk: it notes that Apple buys its thin-modem products, "which do not include our integrated application processor technology, and which have lower revenue and margin contributions than our combined modem and application processor products" (FY2025 10-K, accession 0000804328-25-000085). The licensing segment carries no such drag. It is the technology royalty stream that keeps the blended margin near 25% even as the handset chipset mix shifts, and it is why the operating-income lever the price depends on has room to work.

The forward-growth valuation methods agree with that read. Perpetual-growth DCF lands near $299 against a $227 price, the exit-multiple DCF near $275, and the discounted future market cap near $210, all built off about $44.5 billion of revenue and a free-cash-flow base near $12.8 billion. Relative valuation at a sector P/E lands near $249. When the methods that price the forward stream sit at or above the price while the company funds the transition from a balance sheet carrying about $9.8 billion in liquid assets and covering interest roughly 17 times over, the bet is coherent: pay for the diversification that is already showing up in the segment lines, financed by a business that does not need outside capital to get there.

Bear Case

The bear case is a question about what the price assumes, and the most fragile assumption is the one the company has already told you is coming. Apple is targeting a 2027 timeframe to replace Qualcomm's modem with its own silicon, and Qualcomm has publicly assumed near-zero Apple modem revenue by then. The 10-K names the structure of the problem directly: Apple's purchases are the lower-margin thin-modem products today, and the filing warns these shifts can "have an adverse effect on our revenues and margins" (FY2025 10-K, accession 0000804328-25-000085). The price needs roughly 29% annual operating-income growth for five years. Losing the single largest handset customer's modem volume inside that window is a direct subtraction from the very line the model is compounding.

The handset core is already softening underneath the diversification story. Recent results carried a roughly 13% decline in handset revenue, and quarterly guidance has flagged industry-wide memory supply constraints pressuring demand. So the bet is doubly loaded: the new businesses (automotive, IoT, the data-center push behind the roughly $2.3 billion Alphawave deal) must not only grow, they must grow fast enough to cover a shrinking handset base and an Apple cliff at the same time. About 87% of revenue still sits in the QCT chipset segment, so the cushion from licensing, real as it is, is only 13% of the top line.

The conservative valuation methods are the more honest read of what the price is underwriting. Earnings power value lands near $104, the FCF-yield method near $117, the share-based-compensation-adjusted FCF method near $86, and the book-anchored simple excess return near $105, all roughly half the current price. The model's own implied-value band runs from about $103 at the low to $150 at the base, with the current $227 sitting at the very top of the high case. Only about 28% of comparable fast-growers have sustained this pace for five years. Strip out the assumption that diversification offsets the Apple loss cleanly, and the price has little support beneath it from any method that values the business on what it earns today rather than on what it must earn next.

Valuation

The cleanest way to read the valuation is to invert it. At $227.29 the enterprise is priced at roughly 21x company-wide operating income, which solves to operating-profit growth of about 29% a year sustained for five years, at an 11.7% cost of capital with 4% terminal growth. Each one-point change in the cost of capital moves that implied growth rate about five points, so the headline figure is approximate, not a forecast. Against Qualcomm's own history the near-term pace is reachable; the demand is on duration.

The method families sort the price into its parts. The forward-growth family reaches it: perpetual-growth DCF near $299, exit-multiple DCF near $275, discounted future market cap near $210. The relative-multiple family sits just below at a sector P/E value near $249 and an EV/EBITDA value near $210. The earnings-power and asset families fall well short: earnings power value near $104, FCF yield near $117, simple excess return near $105, Graham number near $74. The blended central estimate that survives the method screen is about $249. The model's reasonable-growth band runs from roughly $103 low to $150 base, with the high case at $227.

Read together, the picture is consistent rather than contradictory. The growth methods say the price is fair if the diversification compounds; the earnings and asset methods say the price is expensive against what the business produces now. The gap between those two reads is exactly the Apple-replacement-versus-non-handset-ramp question. The balance sheet does not complicate the bet: net debt near $5.5 billion against trailing operating income of about $11.4 billion is a leverage ratio under one turn, and interest coverage near 17x means the financing of the transition is not in doubt.

Catalysts

Near-term catalysts cluster around the diversification proof points and the Apple timeline. Q2 fiscal 2026 results landed ahead of expectations (revenue near $10.6 billion, adjusted EPS of $2.65 versus about $2.56 expected), and the stock rose double digits on the print, so the next print's read on automotive and IoT momentum will matter for whether the market keeps crediting the non-handset story.

The single largest structural catalyst is the Apple modem transition, with Apple targeting a 2027 timeframe to move to its own silicon and Qualcomm already modeling near-zero Apple modem revenue by then. Watch each handset-revenue line and any change to that 2027 assumption.

On the growth side, management raised its fiscal 2029 non-handset revenue target to roughly $40 billion, nearly double the prior goal, and the roughly $2.3 billion Alphawave acquisition extends the push into data-center connectivity. Progress against that target, plus automotive's run rate near $1.1 billion a quarter (up about 15% year over year), are the markers that would justify the growth lever the price depends on. Industry-wide memory supply constraints flagged in recent guidance are the main near-term demand risk to track.

Sources: Qualcomm Q2 2026 earnings (heygotrade.com, investing.com), 24/7 Wall St., Seeking Alpha, The Motley Fool, TIKR.

Peer Cohorts (Per Segment, With Filing Citations)

QCT (Qualcomm CDMA Technologies) / QSI (Qualcomm Strategic Initiatives) (reported)

QTL (Qualcomm Technology Licensing) (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive QCOM report on boothcheck