QCOM Qualcomm
Real but narrowing moat, flat five-year growth, priced for 11% when 5-6% is the honest bet.
The business
Qualcomm designs and sells Snapdragon system-on-chips (QCT segment) that power the majority of Android smartphones plus growing auto, IoT, and PC/edge-AI silicon, and separately collects patent royalties (QTL segment) from device makers for essential 3G/4G/5G cellular technology under a toll-booth licensing model.
Quality gate · 89/100
Moat & management
| Moat | narrow moat |
| Source | intangible |
| Trajectory | eroding |
| Management | adequate |
QTL's standard-essential-patent royalty stream is a genuine toll booth on cellular devices, but QCT's edge comes from integrated modem-RF-AP design that faces real erosion: Apple is systematically walking away from Qualcomm modems (licensing deal only bridges to 2027), Samsung and Google are pushing more in-house silicon, and MediaTek pressures the mid-tier. Five-year revenue CAGR of roughly zero is the market's own evidence the moat isn't currently generating growth, only defending share.
Amon's diversification into auto, IoT, and edge-AI PCs is the right response to smartphone maturity and is showing real design-win traction, but it remains small relative to handset revenue and past diversification bets (server silicon) failed; buybacks have shrunk share count modestly (-1.4% CAGR) and leverage is conservative.
Owner-earnings inputs
| Owner earnings (TTM) | 9.92B |
| Owner-earnings yield | 5.6% |
| Free-cash-flow yield | 7.1% |
| Growth used (normalized) | 5.5% |
| Market-implied growth (reverse DCF) | 11.4% |
| Terminal growth | 3.0% |
| Discount rate (hurdle) | 12.1% |
Projected owner earnings
| Yr | Owner earnings | Growth | PV |
|---|---|---|---|
| 1 | 10.47B | 5.5% | 9.34B |
| 2 | 11.03B | 5.3% | 8.78B |
| 3 | 11.59B | 5.1% | 8.24B |
| 4 | 12.17B | 5.0% | 7.71B |
| 5 | 12.75B | 4.8% | 7.21B |
| 6 | 13.34B | 4.6% | 6.73B |
| 7 | 13.93B | 4.4% | 6.27B |
| 8 | 14.52B | 4.2% | 5.83B |
| 9 | 15.11B | 4.1% | 5.42B |
| 10 | 15.70B | 3.9% | 5.02B |
| 11 | 16.28B | 3.7% | 4.65B |
| 12 | 16.86B | 3.5% | 4.29B |
| 13 | 17.43B | 3.4% | 3.96B |
| 14 | 17.98B | 3.2% | 3.65B |
| 15 | 18.52B | 3.0% | 3.35B |
Key risks
- Apple's continued exit from Qualcomm modems removes a large, high-margin revenue and royalty stream once the 2027 bridge deal lapses
- Global smartphone unit market is mature/flat, QCOM's core TAM, with limited pricing power to drive organic growth
- In-house silicon efforts at Samsung, Google, and Chinese OEMs plus MediaTek's low-end pressure chip away at QCT share over time
Catalysts
- Auto and IoT design-win pipeline (tens of billions in disclosed bookings) converting to revenue as content-per-vehicle and edge-AI device adoption grows
- On-device AI driving a smartphone/PC premium-tier refresh cycle that favors higher-ASP Snapdragon silicon
Recent news
score · 8 articles
- Here's Why Qualcomm Is Still Overlooked vs. Nvidia and Intel
- No Matter Who Wins the Smartphone and AI Chip Races, ARM Stock Still Benefits
- Texas Instruments vs. Qualcomm: One Pays Out 94% of Earnings. The Better Dividend Chip Stock Is Clear.
- S&P 500, Dow, Nasdaq End Second Week Lower Over Elevated Oil Prices, Chipmaker Rout — PSKY, UBER, QCOM, VZ, INTC In Focus
- TSMC might set up a price hike that could come straight for your next phone, laptop, or tablet
- MRVL Has Momentum. The Question Is The Price
- Qualcomm (QCOM) Raises Product Prices And Deepens Samsung Snapdragon Ties
- QCOM Stock Drops 2% — Qualcomm Reportedly Plans Chip Price Hikes Amid Rising Supply Costs
⚠ maintenance capex ≈ min(capex, D&A), capped at FCF · Price pays for ~11%/yr owner-earnings growth over 15y (reverse DCF); model credits 6%. · Rich vs our conservative value, but a quality business is not a short — stance is WAIT for a better price, not sell.