The Qualcomm story
Qualcomm designs the modems and processors in most Android phones and licenses wireless patents, with its expansion into cars, connected devices and AI tested by falling handset revenue.
Written from Qualcomm's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.
- $187.48share price, last close
- $196.9Bmarket value
- 23/36TenQ Score checks passed
- 11.8%growth a year the price assumes
The story in brief
- Diversification meets handset weakness. In the quarter to June 2026, combined QCT Automotive and IoT revenue grew 28% year over year, while handset revenue declined 20%.
- Cash generation remains substantial. Over the last twelve months, Qualcomm generated $10.4 billion in free cash flow, alongside $3.2 billion in stock-based pay.
- Growth expectations exceed history. The reverse DCF implies 11.8% annual growth in free cash flow after stock pay, compared with 4.5% delivered annually over the last 10 years.
What drives the business
- Qualcomm is extending its mobile computing and wireless technology beyond handsets through Snapdragon automotive and PC platforms and Dragonwing industrial and networking products.
- Its QCT semiconductor business supplies chips and software, while QTL licenses wireless intellectual property, including patents essential to cellular standards, to hundreds of companies.
- Licensing contributes substantial profitability: in the quarter to June 2026, QTL’s earnings before taxes were 69% of revenue, compared with 26% for QCT.
- Snapdragon Digital Chassis covers vehicle connectivity, digital cockpits and assisted driving, and Automotive revenue grew 61% in the quarter to June 2026, extending its run to 23 consecutive quarters of double-digit annual growth.
- IoT revenue grew 9% in the quarter to June 2026, while the completed acquisition of Modular Inc is intended to establish an open software foundation for generative and agentic AI.
What the price assumes
At $187.48, the reverse DCF implies that free cash flow after stock pay grows 11.8% a year for ten years, using a 10.2% discount rate.
Qualcomm delivered 4.5% annual growth on that measure over the last 10 years, while TenQ’s check sets a 4.2% bar by slowing that record halfway toward 4%.
That implied acceleration contrasts with revenue growth of 1.9% over the last twelve months and an annual pace of 0.1% over the last three years.
What could change the story
- Dependence on a small number of customers and licensees, customer development of competing internal technology, and significant exposure to China leave the handset business vulnerable to changes beyond consumer demand.
- Higher industry input costs and reliance on limited third-party suppliers could delay margin recovery as product pricing changes gradually take effect.
- QCT’s earnings before taxes fell to 26% of revenue in the quarter to June 2026 from 30% a year earlier, showing that growth outside handsets has not prevented pressure on chip profitability.
- Shareholder distributions represented 125.5% of free cash flow over the last twelve months, failing TenQ’s cash coverage check, while total debt was $15.3 billion against $8.3 billion in cash and short-term investments.
What to watch next
- For the fourth quarter of fiscal 2026, Qualcomm expects revenue between $9.7 billion and $10.5 billion, including QCT revenue between $8.4 billion and $9.0 billion and QTL revenue between $1.2 billion and $1.4 billion.
- Gross margins will indicate whether product pricing is catching up with higher input costs, while handset, Automotive and IoT revenue will show whether diversification is offsetting phone weakness.
- Management expects non-handset revenue growth, including Data Center, to accelerate from 24% in fiscal 2026 to greater than 60% in fiscal 2027, with non-handset revenue reaching $40 billion by fiscal 2029.
Sources
- Qualcomm's earnings release, filed with the SEC
- Its latest 10-Q or 10-K, for the risk factors
- The QCOM stock report, for every figure and check