Is Qualcomm Still Attractively Priced After Its Edge AI Expansion and Three Year 66% Surge

• If you are wondering whether QUALCOMM at around $178 a share is still a smart buy or if the best gains are already behind it, you are not alone. That question is exactly what this valuation deep dive will unpack.
• The stock has climbed about 2.0% over the last week, 0.9% over the past month, and is up 16.0% year to date. This adds to a solid 15.0% gain over the last year and a 66.6% gain over three years.
• Recent headlines have focused on QUALCOMM doubling down on AI at the edge, from smartphones to laptops and connected cars, as investors look for the next wave of chip demand. In addition, ongoing partnerships with major device makers and expansion into automotive and IoT have helped shift the narrative from a mature handset player to a broader, growth oriented platform.
• Despite that momentum, QUALCOMM only scores a 3 out of 6 on our valuation checks. This suggests the market may be paying up in some areas while overlooking value in others. Next, we will walk through different valuation approaches, and then wrap up with a more holistic way to think about what QUALCOMM may be worth beyond the usual metrics.

Find out why QUALCOMM's 15.0% return over the last year is lagging behind its peers.

Approach 1: QUALCOMM Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes estimates of the cash a business is expected to generate in the future and discounts those cash flows back to today, to arrive at an estimate of what the entire company is worth now.

For QUALCOMM, the latest twelve month free cash flow is about $12.6 billion. Analysts and internal estimates project this to rise to roughly $18.4 billion by 2030, with further growth extrapolated beyond the formal analyst window by Simply Wall St using a 2 Stage Free Cash Flow to Equity model. These projected cash flows, all in $, are discounted back to today to reflect risk and the time value of money.

On this basis, the model arrives at an intrinsic value of about $207.03 per share, implying the stock is 13.9% below estimated fair value at the current market price. In other words, the DCF suggests investors are still getting QUALCOMM at a discount relative to the cash it is expected to generate.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests QUALCOMM is undervalued by 13.9%. Track this in your watchlist or portfolio, or discover 907 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

For a consistently profitable business like QUALCOMM, the price to earnings ratio is a useful way to gauge how much investors are willing to pay today for each dollar of current earnings. It naturally captures the market’s view on both near term performance and longer term durability of profits.

In general, faster growth and lower perceived risk justify a higher PE multiple, while slower growth or greater uncertainty should pull that “normal” or “fair” PE down. QUALCOMM currently trades on about 34.28x earnings, compared with roughly 37.03x for the broader semiconductor industry and a much richer 72.96x across its closest peers, indicating the stock is priced more conservatively than many competitors.

Simply Wall St’s Fair Ratio for QUALCOMM is 33.46x, a proprietary estimate of what a reasonable PE should be given its earnings growth outlook, profitability, industry, market cap and risk profile. This tailored benchmark is more informative than raw peer or industry comparisons, which can be skewed by outliers or companies at very different stages of maturity. With QUALCOMM’s actual PE sitting only slightly above its Fair Ratio, the stock appears broadly in line with what its fundamentals justify.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1448 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, so let us introduce you to Narratives, a simple framework that lets you write the story behind your numbers by linking your view of QUALCOMM’s future revenue, earnings and margins to a concrete financial forecast and a Fair Value, then comparing that Fair Value to today’s Price to decide whether to buy, hold or sell.

On Simply Wall St’s Community page, millions of investors use Narratives as an accessible tool to turn their qualitative views into quantitative outcomes. Those Narratives update dynamically as new information such as earnings, product launches or regulatory news hits the market, so your thesis is always tied to the latest data.

For example, one QUALCOMM Narrative might assume strong Edge AI, PC and automotive momentum with Fair Value around $300 per share. A more cautious Narrative could lean on slower growth and execution risk with Fair Value closer to about $192. Looking at both side by side can make it easier to see which story you believe and how much upside or downside you think the current price is offering.

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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