Is Qualcomm Fairly Priced After 12% Pullback and Fresh 5G Chip Developments?

• Ever wondered if QUALCOMM’s stock is truly worth its price tag right now? You are not alone. Plenty of investors are asking if there is untapped value or if things have already run their course.
• QUALCOMM shares have been on something of a rollercoaster lately, down 12.0% over the past month but still sitting up 7.5% for the year. This shows just how quickly market sentiment can turn.
• In recent weeks, news around developments in 5G chip technology and potential new partnerships has fueled speculation, adding fresh excitement and some uncertainty to QUALCOMM’s outlook. These headlines are keeping analysts and investors watching closely to see how the company will leverage its technology edge in an increasingly competitive market.
• When you look at the numbers, QUALCOMM scores a 4 out of 6 on our valuation checks, indicating a solid case for undervaluation. However, as you will see, traditional metrics might only tell part of the story, with an even better way to unpack the company’s true worth coming up later.

Find out why QUALCOMM's 8.0% return over the last year is lagging behind its peers.

Approach 1: QUALCOMM Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and discounting them to today's dollars. This method is widely used to gauge what a business is really worth, independent of day-to-day market swings.

Currently, QUALCOMM generates Free Cash Flow (FCF) of $12.6 Billion. Analyst estimates extend out five years and project steady growth, with Simply Wall St’s extrapolations reaching $18.4 Billion by 2030. This suggests that QUALCOMM is expected to deliver robust and growing cash returns to shareholders over time.

Based on these projections, the DCF model generates an intrinsic value estimate of $204.56 per share. With QUALCOMM trading roughly 19.3% below this calculated fair value, the numbers indicate a notable margin of safety for new investors.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests QUALCOMM is undervalued by 19.3%. Track this in your watchlist or portfolio, or discover 925 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for QUALCOMM.

Approach 2: QUALCOMM Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is widely viewed as one of the most effective ways to value profitable companies like QUALCOMM. Since it measures the price investors are willing to pay for each dollar of earnings, it helps put QUALCOMM’s share price into context against its actual profitability.

A “normal” or “fair” PE ratio for a stock is shaped by investor views on its growth prospects, risk profile, and the general health of its industry. Stronger anticipated growth typically supports a higher PE, while higher risk would warrant a lower one. QUALCOMM’s current PE stands at 31.88x, which is below the average PE of its peers at 71.36x. It is also slightly lower than the broader semiconductor industry average of 35.83x.

Simply Wall St’s proprietary “Fair Ratio” takes this a step further by tailoring QUALCOMM’s expected PE to its unique characteristics, including earnings growth, profit margins, market capitalization, and its industry context and risk factors. For QUALCOMM, this Fair Ratio is 40.57x, a metric that aims to give a truer sense of value than standard industry or peer comparisons.

Given that QUALCOMM’s actual PE of 31.88x is notably below its Fair Ratio, the stock appears undervalued relative to what a reasonable investor might expect based on the company’s prospects and quality.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1432 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your QUALCOMM Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is a simple yet powerful way for you to tell the story behind your view of a company. It blends your perspective on QUALCOMM’s strategy, market position, and future prospects with estimates for future revenue, earnings, and margins, all leading to your own fair value calculation.

Instead of focusing only on static ratios or historical numbers, Narratives link QUALCOMM’s evolving business story directly to your forecast and valuation. This approach can help you make decisions based on whether the current share price is above or below your assessed fair value. They are designed to be accessible and easy to use on Simply Wall St's Community page, where millions of investors can create, update, and compare their Narratives in real time.

Unlike traditional methods, Narratives automatically update as fresh news or results come in, so your investment thesis can keep pace with QUALCOMM’s latest announcements or market shifts. For example, the most optimistic Narrative currently estimates a fair value of $300 based on strong AI growth and market leadership. In contrast, a more conservative view puts fair value at just $140 due to perceived risks. This demonstrates how different investors’ stories and assumptions lead to different conclusions.

Do you think there's more to the story for QUALCOMM? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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