Insights

• Qualcomm is a financially healthy company with strong revenue growth, profitability, and cash flow generation.
• The company is effectively managing its costs and improving profitability, as evidenced by increasing margins.
• Qualcomm is investing in growth while still maintaining strong profitability.
• The company's strong financial position gives it the flexibility to invest in growth and return value to shareholders.
• The company's diversification strategy is expected to continue to pay off, as it expands into new markets like automotive and IoT.
• The company faces risks related to customer concentration, geopolitical tensions, legal challenges, and competition for talent.

Analysis

• Revenue - Qualcomm's revenue growth is driven by strong demand for its products and technologies, particularly in the premium smartphone market. - The company is seeing strong growth in its automotive and IoT segments, which are diversifying its revenue streams. - The success of the Snapdragon 8 Elite platform, particularly in the Samsung Galaxy S25 series, is a key driver of revenue growth. - The company's revenue growth is outpacing the industry average, indicating that Qualcomm is gaining market share.
  • Profitability
    • Qualcomm is effectively managing its costs and improving profitability, as evidenced by increasing margins.
    • The company's return on assets, return on equity, and return on invested capital are all significantly above the industry average, indicating that Qualcomm is generating a high return for its shareholders.
    • The company's gross profit margin, net profit margin, and EBITDA margin are all significantly above the industry average, indicating that Qualcomm is generating a high profit margin on its sales.
  • Liquidity
    • Qualcomm's strong cash position and increasing total current assets indicate a healthy liquidity position and the ability to meet short-term obligations.
    • The company's current ratio and quick ratio are below the industry average, indicating that Qualcomm may have a lower level of liquidity than its peers.
  • Solvency
    • The company's decreasing long-term debt suggests a focus on reducing financial leverage and improving financial stability.
    • The company's total debt to total equity ratio and debt to EBITDA ratio are significantly below the industry average, indicating that Qualcomm has a low level of debt relative to its earnings.
  • Operational Efficiency
    • The company's return on assets, return on equity, and return on invested capital are all significantly above the industry average, indicating that Qualcomm is effectively utilizing its assets to generate profits.
    • The company's gross profit margin, net profit margin, and EBITDA margin are all significantly above the industry average, indicating that Qualcomm is generating a high profit margin on its sales.
    • The decrease in net property, plant, and equipment could indicate a shift towards a more asset-light business model or a focus on strategic investments in key areas.
  • Cash Flow Analysis
    • Qualcomm is generating strong free cash flow, which is providing the company with the financial flexibility to invest in growth opportunities, such as acquisitions or investments in new technologies.
    • The company's cash flow from operations is increasing, indicating that Qualcomm's core business operations are generating strong cash flow.
    • The company's capital expenditures are decreasing, suggesting a focus on organic growth and strategic investments in key areas.
    • The company's dividend growth is sustainable, given its strong free cash flow generation.
  • Risk Factors
    • The company's reliance on a small number of customers for a large portion of its revenue could pose a risk if these customers decide to develop their own integrated circuit products.
    • The company's exposure to geopolitical conflicts, trade policies, and regulatory challenges could disrupt operations or limit business opportunities.
    • The company's ongoing legal challenges related to its patent licensing practices create uncertainty and potential liabilities that could impact the business.
    • The company's ability to attract and retain qualified employees, particularly engineering talent, is critical for maintaining its technology leadership.
  • Future Outlook
    • Qualcomm is expected to continue to grow its revenue and profitability in the coming quarters.
    • The company's diversification strategy is expected to continue to pay off, as it expands into new markets like automotive and IoT.
    • The company's strong financial position gives it the flexibility to invest in growth and return value to shareholders.
    • The company's strong free cash flow generation will provide the company with the financial flexibility to invest in growth opportunities, such as acquisitions or investments in new technologies.
    • The company's dividend growth is expected to continue, as it seeks to return value to shareholders.

Benchmarks (as of 2025-03-21)

• Performance Comparison:

  • QUALCOMM, Inc. (QCOM) has shown mixed performance compared to the Technology Select Sector SPDR Fund (XLK). Year-to-date, QCOM has outperformed XLK by 10.38%. However, over longer periods such as 1 year, 2 years, and 3 years, QCOM has underperformed XLK by -8.42%, -16.84%, and -33.21%, respectively. This suggests that while QCOM has had recent positive momentum, its longer-term performance has lagged behind the broader technology sector.

• Risk and Return Analysis:

  • The annualized returns show that QCOM has provided lower returns than XLK over the 1-year, 2-year, and 3-year periods. For example, the 3-year annualized return for QCOM is 2.14%, compared to 11.81% for XLK.
  • The annualized volatility data indicates that QCOM is generally more volatile than XLK. For instance, in Q3 2024, QCOM's volatility ranged from 28.73% to 63.59%, while XLK's ranged from 17.18% to 35.82%. This higher volatility suggests that QCOM carries a higher level of risk compared to the broader technology sector.
  • The drawdown figures show that QCOM has experienced larger maximum drawdowns than XLK. QCOM's maximum drawdown was -44.29% on 2022-11-03, while XLK's was -33.56% on 2022-10-12. This indicates that QCOM is subject to more significant declines from peak values, further highlighting its higher risk profile.

• Risk-Adjusted Performance:

  • The Sharpe Ratio analysis reveals that XLK generally offers better risk-adjusted returns compared to QCOM. The Sharpe ratios for XLK are consistently higher than those of QCOM throughout the analyzed period.
  • The Beta values indicate that QCOM is more sensitive to market movements than XLK. QCOM's beta is consistently higher than XLK's, suggesting that QCOM's price is likely to fluctuate more than XLK in response to market changes. As of Q1 2025, the beta for QCOM is 1.90, while the beta for XLK is 1.59.

• Overall Assessment:

  • Based on the analysis, QUALCOMM, Inc. (QCOM) exhibits higher volatility and risk compared to the Technology Select Sector SPDR Fund (XLK). While QCOM has shown recent outperformance year-to-date, its longer-term returns have lagged behind the broader technology sector, and it has experienced larger drawdowns. The Sharpe Ratio indicates that XLK offers better risk-adjusted returns. QCOM's higher beta suggests it is more sensitive to market movements.
  • A significant trend is the recent decrease in volatility for both QCOM and XLK as of Q1 2025, although QCOM remains more volatile. Investors should be aware of QCOM's higher risk profile and consider whether the potential for higher returns justifies the increased volatility and drawdown risk.

Peers Price History(as of 2025-03-21)

• Performance Comparison:

  • QUALCOMM (QCOM) has shown mixed performance compared to Advanced Micro Devices (AMD) and Texas Instruments (TXN). Over the past year, QCOM underperformed TXN but significantly outperformed AMD. For instance, QCOM's 1-year return was -5.96%, while AMD's was -40.75% and TXN's was 6.68%. Over a 2-year period, QCOM outperformed both AMD and TXN, with returns of 34.52% compared to 9.08% and 7.72%, respectively.
  • QCOM's performance has been inconsistent, with periods of outperformance and underperformance relative to its peers. In the short term (Year-To-Date and 1 Week), QCOM's performance has been varied, showing overperformance YTD but underperformance over the last week.

• Risk and Return Analysis:

  • QCOM's annualized returns have been mixed. Over 1 year, QCOM's annualized return was -5.96%, which is better than AMD's -40.75% but worse than TXN's 6.68%. Over 2 years, QCOM's annualized return was 15.98%, outperforming both AMD (4.44%) and TXN (3.79%).
  • QCOM's annualized volatility has generally decreased over time but remains moderate. For example, in Q1 2022, QCOM's volatility was 54.61, decreasing to 34.22 by Q1 2025. AMD consistently exhibited higher volatility, while TXN showed lower volatility.
  • QCOM's maximum drawdown was -44.06% on 2023-05-24, which is less severe than AMD's -65.45% but more significant than TXN's -25.52%. This indicates that QCOM carries a moderate level of risk compared to its peers.

• Risk-Adjusted Performance:

  • QCOM's Sharpe Ratio has been volatile, indicating inconsistent risk-adjusted returns. TXN generally exhibited higher Sharpe Ratios, suggesting better risk-adjusted performance. In Q1 2025, QCOM's Sharpe Ratios ranged from 0.78 to -0.01, while TXN's ranged from 0.99 to 0.26.
  • QCOM's beta values have consistently been above 1, indicating that the stock is more volatile than the market. As of March 2025, QCOM's beta was around 1.9, suggesting higher market sensitivity compared to TXN (around 1.3).

• Overall Assessment:

  • QUALCOMM (QCOM) presents a mixed profile compared to Advanced Micro Devices (AMD) and Texas Instruments (TXN). QCOM has demonstrated strong performance over longer periods (2-3 years) but has shown inconsistency in shorter time frames. Its risk profile is moderate, with volatility and drawdown figures falling between those of AMD and TXN.
  • A key trend is the decreasing annualized volatility for all three companies, suggesting a stabilization in the semiconductor market. However, AMD remains the most volatile, while TXN offers more stable, risk-adjusted returns.
  • Investors should consider QCOM's inconsistent short-term performance and moderate risk profile. While QCOM has shown strong returns over longer periods, its volatile Sharpe Ratio and beta above 1 indicate that it may not be suitable for risk-averse investors. TXN appears to offer a more stable and risk-adjusted investment option, while AMD carries higher risk with potentially higher returns.

Peers Fundamentals(as of 2024-12-31)

1. Market Position and Size:

   • QCOM is the largest company in the peer group, with a market cap significantly larger than AMD and TXN.
   • QCOM's market cap is reflected in its financial performance, with higher revenue, EBITDA, and net income compared to its peers.
   • This suggests QCOM holds a dominant position in the semiconductor industry, benefiting from its size and market share.

2. Profitability and Efficiency:

   • QCOM exhibits strong profitability, with higher Gross Profit Margin, EBITDA Margin, and Net Profit Margin than its peers and the industry average.
   • QCOM demonstrates high efficiency in generating returns on assets, equity, total capital, and invested capital, exceeding its peers and industry benchmarks.
   • This indicates QCOM's ability to effectively manage costs, generate strong profits, and utilize its resources efficiently.

3. Financial Health and Stability:

   • QCOM maintains a moderate level of liquidity, with Current Ratio and Quick Ratio lower than its peers and the industry average.
   • QCOM has a moderate level of debt, with Total Debt to Total Equity Ratio and Debt / EBITDA lower than TXN and the industry average but higher than AMD.
   • This suggests QCOM has a moderate level of financial risk, but it is not as risky as its peers or the industry average.

4. Valuation and Market Perception:

   • QCOM is significantly undervalued compared to its peers and industry standards based on its sales, EBITDA, and earnings.
   • This suggests that the market may be underestimating QCOM's potential, potentially indicating an attractive investment opportunity.

5. Cash Flow and Capital Management:

   • QCOM generates strong cash flow from its operations, with higher Net Operating Cash Flow and Free Cash Flow than its peers, considering their respective market caps.
   • QCOM's capital expenditure is lower than TXN but higher than AMD, suggesting a moderate level of investment in capital assets.
   • This indicates QCOM's ability to effectively manage its capital and generate strong cash flow, even at a large scale.

6. Growth and Future Prospect:

   • QCOM's growth in sales, EBITDA, net income, and basic earnings per share is consistently lower than the peer group average, suggesting potential challenges in maintaining market share or competitive advantage.
   • QCOM's growth rates have been consistently decreasing over the 5-year period, and its most recent year-over-year growth rates are lower than its 5-year CAGRs, suggesting a potential deceleration in growth and a need to find new avenues for expansion.
   • However, QCOM shows superior growth in free cash flow and free cash flow margin compared to peers, indicating its ability to generate strong cash flow from its operations.
   • This suggests that QCOM may need to find new ways to drive growth and maintain its market share, while focusing on its strong cash flow generation capabilities.

7. Potential for Investment:

   • QCOM's strong profitability, efficiency, and cash flow generation make it a potentially attractive investment.
   • However, its lagging growth and undervaluation compared to peers and industry standards raise concerns about its future prospects and investor confidence.
   • Investors should carefully consider QCOM's growth prospects and valuation before making an investment decision.

8. Key Risks and Considerations:

   • QCOM's lagging growth compared to peers could indicate a loss of market share or competitive advantage, potentially impacting its future profitability.
   • QCOM's undervaluation compared to peers and industry standards suggests a lack of market confidence in its future prospects, which could limit its ability to raise capital or attract investors.
   • QCOM's declining growth trends suggest a potential deceleration in growth, which could impact its future performance and profitability.

9. Overall Assessment:

   • QCOM is a financially strong company with high profitability, efficient returns, and strong cash flow generation.
   • However, QCOM's growth is lagging behind its peers, and its valuation is significantly lower than its peers and industry standards.
   • This suggests that QCOM may be facing challenges in maintaining its competitive position and attracting investor confidence.
   • Investors should carefully consider QCOM's growth prospects and valuation before making an investment decision.