Key takeaways
View moreQualcomm appears undervalued based on its strong financial performance, conservative valuation multiples compared to industry averages, and significant growth opportunities in 5G, automotive, and IoT markets. The company's technological leadership and diversification strategy offer potential for future value creation, while current valuation metrics seem to overemphasize risks related to customer concentration and geopolitical tensions.
- Qualcomm reported record revenues of $11.7 billion and non-GAAP EPS of $3.41 in fiscal Q1 2025, exceeding guidance, driven by the success of the Snapdragon 8 Elite platform.
- The company's diversification strategy is paying off, with significant year-over-year growth in automotive (61%) and IoT (36%) segments.
- Qualcomm's Enterprise Value to EBITDA ratio of 14.01 is significantly lower than the industry average of 257.24, suggesting potential undervaluation.
- Qualcomm faces risks related to customer concentration, geopolitical tensions (particularly U.S.-China), and ongoing legal challenges regarding its patent licensing practices, as highlighted in SEC filings.
- Despite strong financial performance, Qualcomm's stock price has underperformed the Technology Select Sector SPDR Fund (XLK) over the past year, with returns of -9.21% compared to XLK's 6.78%.
- Analysts have raised concerns about QTL licensing, particularly regarding Huawei, and the sustainability of growth in the China market, introducing uncertainty into future revenue projections.
- Qualcomm is making significant progress in the PC market, with over 80 Snapdragon X series designs in production or development, indicating a promising new revenue stream.
- The positive resolution of the Arm vs. Qualcomm trial was a significant victory, securing the license for its Oryon CPUs and vindicating Qualcomm's CPU innovations.
- Management aims to achieve $22 billion in non-handset revenues by 2029, demonstrating a commitment to diversification and reducing reliance on the smartphone market.
- Qualcomm's Return on Assets (ROA) of 19.46% and Return on Equity (ROE) of 41.96% are significantly above industry averages, indicating efficient asset utilization and strong profitability.
Evaluation summary
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Company Overview:
- QUALCOMM, Inc. develops and commercializes foundational technologies and products for mobile devices and wireless products. Its operations are divided into three segments: Qualcomm CDMA Technologies (QCT), which develops and supplies integrated circuits and system software; Qualcomm Technology Licensing (QTL), which grants licenses and provides rights to use the firm's intellectual property; and Qualcomm Strategic Initiatives (QSI), which focuses on new opportunities for its technologies.
- QCT is a primary revenue driver, focusing on integrated circuits for voice and data communications, while QTL generates revenue through licensing of its extensive patent portfolio related to 3G, 4G, and 5G technologies.
- Benchmarks used for comparative analysis include the Technology Select Sector SPDR Fund (XLK). Peers include Advanced Micro Devices, Inc. (AMD) and Texas Instruments Incorporated (TXN).
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Financial Performance:
- Qualcomm's financial performance shows strong revenue growth. The most recent quarterly revenue (2024-12-31) was $11.669 billion, up from $9.389 billion in 2024-03-31.
- Net income has also been robust, with $3.180 billion reported for the quarter ending 2024-12-31, compared to $2.275 billion for the quarter ending 2024-03-31.
- Gross profit margin has remained relatively stable, ranging from 55.56% to 56.39% across the four quarters. The gross profit margin of 55.77% as of 2024-12-31 is significantly higher than the industry average of -46.64%.
- Net profit margin was 27.25% for the quarter ending 2024-12-31, compared to 24.23% for the quarter ending 2024-03-31. This is significantly higher than the industry average of -2173.49%.
- Return on Assets (ROA) was 19.46% as of 2024-12-31, Return on Equity (ROE) was 41.96%, and Return on Invested Capital (ROIC) was 26.96%. These are all significantly above the industry averages of -12.50%, -29.48%, and -20.41%, respectively.
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Operational Efficiency:
- Total current assets increased from $24.232 billion on 2024-03-31 to $26.065 billion on 2024-12-31, indicating improved short-term financial health. Total liabilities also increased from $28.698 billion to $28.695 billion during the same period.
- Working capital decreased from $15.089 billion on 2024-03-31 to $16.111 billion on 2024-12-31.
- Net operating cash flow increased significantly from $3.554 billion on 2024-03-31 to $4.587 billion on 2024-12-31.
- Free cash flow to equity also increased from $3.370 billion to $4.310 billion during the same period.
- Capital expenditure was $277 million for the quarter ending 2024-12-31, compared to $184 million for the quarter ending 2024-03-31. Depreciation, depletion, and amortization were $436 million for the quarter ending 2024-12-31, compared to $411 million for the quarter ending 2024-03-31.
- Cash dividends paid were $942 million for the quarter ending 2024-12-31.
- The current ratio was 2.62 as of 2024-12-31, slightly below the industry average of 4.37. The quick ratio was 1.99, also below the industry average of 3.56.
- The total debt to total equity ratio was 54.23% as of 2024-12-31, which is comparable to the industry average of 62.80%.
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Growth Opportunities:
- Qualcomm is focusing on expanding into new markets such as automotive and IoT. The earnings call highlighted a 61% year-over-year growth in the automotive segment and a 36% growth in the IoT segment.
- The company is investing heavily in R&D, particularly in 5G technology, automotive, and IoT initiatives.
- Qualcomm is also making progress in the PC market, with over 80 Snapdragon X series designs in production or development.
- Strategic partnerships, including collaborations with Meta, Google, and Samsung, are expected to drive growth in the XR market.
- The company aims to achieve $22 billion in non-handset revenues by 2029.
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Recent Developments and Market Sentiment:
- Qualcomm reported record revenues and earnings in fiscal Q1 2025, exceeding analyst expectations. This has likely boosted market sentiment.
- The success of the Snapdragon 8 Elite platform, particularly in the Samsung Galaxy S25 series, is a key driver of revenue growth.
- The positive outcome of the Arm vs. Qualcomm trial has been viewed favorably by the market.
- Analysts have raised concerns about QTL licensing agreements, the competitive landscape, and macroeconomic factors.
- Management's outlook is positive, but uncertainties remain regarding the China market and potential impacts of government subsidies.
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Risks and Threats:
- Qualcomm faces significant customer and revenue concentration, with a small number of customers accounting for a large portion of revenues.
- There is a risk that customers may develop their own integrated circuit products, reducing demand for Qualcomm's offerings.
- Geopolitical tensions, particularly between the U.S. and China, pose significant threats to Qualcomm's global operations.
- Ongoing legal challenges related to its patent licensing practices create uncertainty and potential liabilities.
- The company faces intense competition from Broadcom, MediaTek, Nvidia, and others.
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Valuation Analysis:
- The Enterprise Value to EBITDA ratio was 14.01 as of 2024-12-31, significantly lower than the industry average of 257.24.
- The Enterprise Value to Sales ratio was 4.34, also lower than the industry average of 11.49.
- These metrics suggest that Qualcomm may be undervalued compared to its peers.
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Price Performance:
- The stock price has fluctuated between approximately $151 and $161 from March 3, 2025, to March 31, 2025.
- There was a significant drop in early April 2025, with the price falling to around $127 by April 4, 2025.
- As of April 28, 2025, the price had recovered to $147.62.
- Compared to the Technology Select Sector SPDR Fund (XLK), Qualcomm has underperformed over the past year, with returns of -9.21% compared to 6.78% for XLK.
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Future Outlook:
- Management projects non-GAAP revenues of $10.2 billion to $11 billion and non-GAAP EPS of $2.70 to $2.90 for Q2 2025.
- The company expects QTL fiscal year 2025 revenues to be consistent with fiscal year 2024.
- Continued growth is expected in the automotive and IoT segments.
- The company's success in the PC market and edge AI is expected to drive future growth.
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Summary:
- Qualcomm is a financially strong company with robust revenue growth, profitability, and cash flow generation.
- The company is effectively diversifying its revenue streams and investing in growth opportunities.
- Key strengths include its technological leadership, strong financial performance, and diversification efforts.
- Weaknesses include customer concentration, geopolitical risks, and ongoing legal challenges.
- Opportunities exist in edge AI, PC market expansion, and automotive partnerships.
- Threats include competition, regulatory hurdles, and market uncertainties.
- Qualcomm's valuation appears attractive compared to industry averages.
- The company's future performance will depend on its ability to execute its diversification strategy, manage risks, and capitalize on growth opportunities.
- Further monitoring is needed on the impact of geopolitical tensions, legal challenges, and competition.
- Overall, Qualcomm presents a mixed investment profile with strong growth potential balanced against significant risks.
Price history
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Fundamentals
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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.
- Profitability
Financial statements
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Public filings
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- Qualcomm is a leading provider of wireless connectivity and computing technologies, with a strong patent portfolio and licensing business that generates high-margin revenues
- The company faces intense competition and risks of customer vertical integration, which could reduce demand for its semiconductor products
- Geopolitical tensions, particularly between the U.S. and China, pose significant threats to Qualcomm's global operations and access to key markets and suppliers
- Ongoing legal challenges related to its patent licensing practices create uncertainty and potential liabilities that could impact the business
- Qualcomm is investing heavily in 5G, automotive, and IoT technologies to diversify its revenue streams and capitalize on emerging industry trends, but the success of these initiatives remains uncertain
- Attracting and retaining top engineering talent is critical for Qualcomm to maintain its technology leadership, but the highly competitive labor market poses recruitment and retention risks
Core Business and Operations:
- Qualcomm is a global technology leader, developing and commercializing foundational technologies for wireless connectivity, high-performance computing, and on-device artificial intelligence
- The company operates primarily through two business segments:
- QCT (Qualcomm CDMA Technologies): Develops and supplies integrated circuit products and system software for mobile devices, automotive systems, and IoT applications
- QTL (Qualcomm Technology Licensing): Grants licenses and provides rights to use portions of Qualcomm's intellectual property portfolio, including patents essential to 3G, 4G, and 5G wireless technologies
- Key customers include major smartphone OEMs like Apple, Samsung, and Chinese manufacturers; main competitors include Broadcom, MediaTek, Nvidia, and others
Industry and Market Trends:
- Wireless industry is highly competitive and subject to rapid technological change, with the transition to 5G networks and devices driving significant innovation
- Demand for Qualcomm's products and technologies is closely tied to the growth and adoption of smartphones, as well as the expansion into new industries like automotive and IoT
- Regulatory environment and government policies, particularly U.S.-China trade tensions, can significantly impact Qualcomm's business and operations
Recent Events:
- Completed acquisition of Veoneer in fiscal 2022, expanding into automotive technology
- Entered into new patent licensing agreements with several key OEMs in fiscal 2024
- Initiated litigation against Shenzhen Transsion Holdings to enforce intellectual property rights
Risk Factors:
- Significant customer and revenue concentration, with a small number of customers/licensees accounting for a large portion of revenues
- Potential for customers to develop their own integrated circuit products, reducing demand for Qualcomm's offerings
- Exposure to geopolitical conflicts, trade policies, and regulatory challenges that could disrupt operations or limit business opportunities
- Cybersecurity threats and risks related to product defects or security vulnerabilities
- Ability to attract and retain qualified employees, particularly engineering talent
Legal Matters:
- Ongoing consumer class action lawsuits and governmental investigations related to Qualcomm's patent licensing practices
- Litigation with Arm Ltd. over the acquisition of Nuvia and related intellectual property disputes
- Potential liability and costs associated with various other legal proceedings and regulatory actions
Management's Discussion and Analysis:
- Revenues grew 9% year-over-year in fiscal 2024, driven by higher QCT equipment/services and QTL licensing revenues
- Gross margins remained flat, while operating expenses increased due to higher R&D, sales/marketing, and other costs
- Strong cash flow from operations, but higher income taxes paid adversely impacted cash balances
- Continued investment in 5G technology development, automotive, and IoT initiatives to drive future growth
Earnings calls
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Earnings Report 2025Q1 (2025-02-05)
Key takeaways
- Strong Q1 2025 Results Exceeded Expectations: Qualcomm's record revenues and earnings significantly surpassed analyst projections, driven by strong performance across multiple segments.
- Premium Smartphone Segment Remains Key Growth Driver: The continued expansion of the premium smartphone market, coupled with Qualcomm's strong market share and increasing content per device, is a significant factor in the company's success.
- Diversification is Paying Off: The substantial growth in automotive and IoT segments demonstrates the effectiveness of Qualcomm's diversification strategy, mitigating reliance on the handset market.
- Edge AI Presents Significant Growth Opportunity: Qualcomm's leadership in edge AI is poised to drive substantial future growth, as on-device AI inference becomes increasingly prevalent.
- PC Market Entry is Gaining Traction: Qualcomm's progress in the PC market, with strong design wins and increasing market share, indicates a promising new revenue stream.
- China Market Remains Important, but Uncertainties Exist: While the Chinese market continues to be a significant contributor to Qualcomm's revenue, the impact of government subsidies and overall market dynamics introduces uncertainty.
- Management's Outlook is Positive, but Risks Remain: While management expressed strong confidence in the company's future, analysts raised concerns about potential risks related to QTL licensing agreements, the competitive landscape, and macroeconomic factors.
Focus of management’s prepared remarks
- Record Financial Performance: Qualcomm reported record revenues ($11.7B) and non-GAAP EPS ($3.41) in fiscal Q1 2025, exceeding guidance. QCT achieved its first $10B quarter.
- Strong Snapdragon Performance: The Snapdragon 8 Elite platform achieved exceptional traction in premium-tier handsets, driving significant revenue growth. The platform's success is highlighted by its global adoption in the Samsung Galaxy S25 series.
- Diversification Growth: Significant year-over-year growth was reported in automotive (61%) and IoT (36%) segments, demonstrating the success of diversification strategies.
- Edge AI Leadership: Qualcomm emphasized its leadership in edge AI, highlighting the increasing importance of on-device AI inference and the potential for significant future growth in this area. The DeepSeek-R1 model's rapid integration into Snapdragon-powered devices was cited as an example.
- PC Market Expansion: Significant progress in the PC market was noted, with over 80 Snapdragon X series designs in production or development, targeting over 100 commercialized devices by 2026. A new Snapdragon X platform targeting the $600 price range was announced.
- XR Market Leadership: Qualcomm reinforced its leading position in the XR market, highlighting collaborations with Meta and Google, and the upcoming launch of a Samsung-built Android XR device powered by Snapdragon.
- Automotive Partnerships: New collaborations with key automotive players (Alps Alpine, Amazon, Google, Leapmotor, Mahindra, Hyundai Mobis) were announced, emphasizing Qualcomm's leadership in the software-defined vehicle market. The launch of the Snapdragon Digital Chassis Workbench was also highlighted.
- QTL Business Strength: Management expressed confidence in the QTL business, highlighting the extension of key agreements with major OEMs and the signing of new long-term license agreements.
- Arm Trial Resolution: The positive outcome of the Arm vs. Qualcomm trial was presented as a significant victory, vindicating Qualcomm's CPU innovations and securing the license for its Oryon CPUs.
- $22 Billion Non-Handset Revenue Target: The company reiterated its commitment to achieving $22 billion in non-handset revenues by 2029.
Focus of the analyst Q&A
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QTL Guidance and Assumptions: Analysts sought clarification on the flat year-over-year QTL guidance, specifically inquiring about assumptions regarding unit shipments, royalty per unit, and the potential impact of ongoing negotiations with Huawei. Concerns were raised about the lack of Huawei revenue in the guidance.
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PC Market Adoption: Analysts inquired about the projected trajectory of Snapdragon X adoption in PCs for 2025 and 2026, focusing on the anticipated adoption curve between enterprise and consumer markets. Questions were raised about OEM partner feedback regarding this adoption.
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China Smartphone Market and Subsidies: Analysts sought insights into the impact of government subsidies on the Chinese smartphone market and their effect on Qualcomm's performance, specifically regarding consumer response and the growth trajectory of Chinese Android OEMs.
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QTL Huawei Negotiations: Analysts pressed for clarification on whether the flat year-over-year QTL guidance included any potential revenue from a settlement with Huawei.
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Tariff Impacts and Pre-Builds: Analysts asked about the potential influence of tariffs on pre-builds or increased demand in the near term.
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June Quarter Seasonality: Analysts sought clarification on the expected seasonality of the June quarter, considering the impact of Samsung's share gain and the typical absence of flagship launches.
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Pricing and ASPs: Analysts inquired about the impact of higher price points on Snapdragon chips, considering both increased features due to AI and higher wafer costs. Questions were raised about the long-term impact on ASPs and how OEM customers are managing these price increases.
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IoT Segment Cyclicality: Analysts asked about the cyclicality within the IoT segment, specifically addressing the negative sequential comparisons observed in recent quarters.
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QCT Gross Margins: Analysts sought an explanation for the unexpectedly strong sequential performance of QCT gross margins.
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Modem Situation with Large Customer: Analysts asked about any changes in the company's outlook regarding the modem situation with a major customer, specifically inquiring about the potential duration of the relationship.
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Size of PC Business within IoT: Analysts sought an estimate of the size of the PC business within the IoT segment, based on the reported market share in the US.
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Longevity of Smartphone Growth: Analysts questioned the sustainability of the strong year-over-year growth in smartphones, considering the overall market growth rate and the impact of factors like Samsung's share gain and China's market dynamics. The question focused on whether Qualcomm could continue to grow even if the overall market does not. A follow-up specifically requested an update on the China market.
Summary
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Financial Performance: Qualcomm reported record revenues of $11.7 billion and non-GAAP EPS of $3.41 in fiscal Q1 2025, exceeding the high end of guidance. QCT (Qualcomm CDMA Technologies) achieved record revenues of $10.1 billion, driven by record handset and automotive revenues. QTL (Qualcomm Technology Licensing) revenues were $1.5 billion, in line with expectations. Year-over-year growth was significant across various segments, particularly in automotive (61%) and IoT (36%). The company returned $2.7 billion to stockholders.
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Revenue Drivers: Strong performance was driven by several factors: record handset revenues fueled by higher volume and content increase in Android premium tier smartphones, particularly the Samsung Galaxy S25 series; robust growth in automotive and IoT segments due to new product launches and increased content; and strong design win momentum in PCs with over 80 designs in production or development. The success of the Snapdragon 8 Elite platform was a key driver across multiple segments. Increased demand in China for premium devices also contributed significantly.
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Profit Margins and Cost Management: QCT EBT margins of 32% exceeded guidance, reflecting revenue upside and operating leverage. QTL EBT margin was 75%, in line with expectations. The impact of TSMC price increases for 3 and 4 nanometer chips was acknowledged, with management stating that the objective is to reflect cost increases in ASPs over time. Management expressed confidence in maintaining strong margins.
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Guidance and Outlook: Q2 2025 guidance projects non-GAAP revenues of $10.2 billion to $11 billion and non-GAAP EPS of $2.70 to $2.90. QTL revenue is projected to be $1.25 billion to $1.45 billion with EBT margins of 69% to 73%. QCT revenue is expected to be $8.9 billion to $9.5 billion with EBT margins of 29% to 31%. The guidance assumes a flat or low single-digit growth in the overall smartphone market, excluding potential upside from China subsidies and AI replacement rates. Management expects QTL fiscal year 2025 revenues to be consistent with fiscal year 2024.
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Strategic Initiatives: Qualcomm highlighted its strong position in the growing edge AI market, emphasizing the increasing importance of on-device AI inference. The company announced several strategic partnerships, including collaborations with major OEMs for Snapdragon-powered PCs, automotive solutions, and XR devices. New product launches, such as the Snapdragon X for PCs and the Snapdragon Digital Chassis Workbench for automotive, were also emphasized. The company is committed to achieving $22 billion in non-handset revenues by 2029.
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Management Commentary: Management expressed strong optimism about the company's performance and future prospects, highlighting record revenues and earnings. They emphasized the success of the Snapdragon 8 Elite platform and the strong momentum in diversification initiatives. The positive resolution of the Arm vs. Qualcomm trial was also noted. The overall tone was confident and positive, emphasizing the company's leadership in key technology areas and its strong market position.
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Industry and Market Conditions: Management acknowledged the potential impact of China subsidies on the smartphone market but did not include this in their Q2 guidance. They observed a continued growth in the premium tier smartphone market, which benefits Qualcomm. The company anticipates continued growth in automotive and IoT segments. Management noted that the strong performance was driven by end-customer demand and not pre-tariff pull-forwards.
Comparative analysis
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Benchmarks (as of 2025-04-28)
Technology Select Sector SPDR Fund (XLK)
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Performance Comparison:
- QUALCOMM, Inc. (QCOM) has generally underperformed the Technology Select Sector SPDR Fund (XLK) across most time periods. As of the Year To Date (YTD) period, QCOM has a return of -3.4% while XLK has a return of -10.12%, indicating that QCOM has outperformed XLK by 6.72%. However, over longer periods such as 1 year, 2 years, and 3 years, QCOM has underperformed XLK. For example, the 1-year return for QCOM is -9.21% compared to 6.78% for XLK, a difference of 15.99%.
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Risk and Return Analysis:
- The annualized returns show that QCOM has provided lower returns compared to XLK over the 1-year, 2-year, and 3-year periods. The 3-year annualized return for QCOM is 2.86%, significantly lower than the 14.13% for XLK, a difference of 11.27%.
- The annualized volatility for QCOM has generally been higher than that of XLK, indicating that QCOM is more volatile. For instance, in Q2 2022, QCOM's volatility ranged from 54.08% to 56.71%, while XLK's ranged from 32.11% to 42.35%.
- QCOM's maximum drawdown was -44.29% on 2022-11-03, which is larger than XLK's maximum drawdown of -33.56% on 2022-10-12. This suggests that QCOM has a higher risk profile compared to XLK.
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Risk-Adjusted Performance:
- The Sharpe Ratio for QCOM is generally lower than that of XLK, indicating that XLK offers better risk-adjusted returns. As of Q2 2025, the Sharpe ratio for QCOM is -0 while for XLK is 0.31.
- The Beta value for QCOM has consistently been above 1 and higher than XLK's beta, indicating that QCOM is more sensitive to market movements. As of Q2 2025, the beta for QCOM is 1.65 and for XLK is 1.4.
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Overall Assessment:
- Based on the data, QUALCOMM, Inc. (QCOM) has underperformed the Technology Select Sector SPDR Fund (XLK) in terms of returns and risk-adjusted performance. QCOM exhibits higher volatility, larger drawdowns, and a lower Sharpe Ratio compared to XLK. While QCOM's beta is higher, indicating greater sensitivity to market movements, this has not translated into superior returns. The trend suggests that XLK has provided more stable and better risk-adjusted returns than QCOM over the analyzed period.
Peers Price History(as of 2025-04-28)
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Performance Comparison:
- QUALCOMM (QCOM) has shown mixed performance compared to Texas Instruments (TXN). Over the past year, QCOM underperformed TXN, with returns of -9.21% and -5.35%, respectively. However, over longer periods (2 and 3 years), QCOM outperformed TXN. For example, QCOM's 2-year return was 33.33% compared to TXN's 3.41%.
- The consistency of QCOM's performance relative to TXN varies depending on the time frame. In the short term (YTD, 1 Week, 1 Month, 3 Months), QCOM's performance fluctuates above and below TXN.
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Risk and Return Analysis:
- The annualized returns show that QCOM has outperformed TXN over 2 and 3-year periods, but underperformed over the past year. QCOM's 2-year annualized return was 15.47% compared to TXN's 1.69%.
- QCOM's annualized volatility has generally been higher than TXN's, indicating that QCOM is more volatile. For example, in Q2 2022, QCOM's volatility ranged from 53.98% to 56.71%, while TXN's ranged from 29.21% to 34.23%.
- QCOM's maximum drawdown was -44.29% on 2022-11-03, while TXN had a maximum drawdown of -33.23% on 2025-04-08. This indicates that QCOM has a higher risk profile compared to TXN.
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Risk-Adjusted Performance:
- The Sharpe Ratio of QCOM has fluctuated over time, with periods of outperformance and underperformance compared to TXN. In Q1 2025, the Sharpe ratios for all three companies decreased, with AMD having the lowest Sharpe ratio of -1.49, QCOM having a Sharpe ratio of -0.58 and TXN having a Sharpe ratio of -0.21.
- QCOM's beta has generally been above 1, indicating that it is more volatile than the market.
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Overall Assessment:
- QCOM has shown mixed performance compared to TXN, with outperformance over longer periods (2 and 3 years) but underperformance over the past year. QCOM is more volatile than TXN, as indicated by its higher annualized volatility and beta. QCOM's maximum drawdown is also higher than TXN's, indicating a higher risk profile.
- A significant trend is the fluctuating Sharpe Ratios for all three companies, reflecting changing market conditions and company-specific events.
Peers Fundamentals(as of 2024-12-31)
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Market Position and Size:
- QUALCOMM (QCOM) has the largest market capitalization at $162,449.28 million, compared to Advanced Micro Devices (AMD) at $156,061.96 million and Texas Instruments (TXN) at $146,055.04 million.
- QCOM's revenue ($40,695 million), gross income ($22,787 million), EBITDA ($12,609 million), and net income ($10,478 million) are significantly higher than its peers, indicating a strong market presence and substantial business operations.
- This suggests that QCOM holds a leading position in the semiconductor industry, reflected in its larger market capitalization and superior financial performance compared to AMD and TXN.
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Profitability and Efficiency:
- QCOM's Gross Profit Margin is 55.99%, which is greater than AMD's 43.73% but less than TXN's 58.02%. It is significantly greater than the industry average of -40.07%.
- QCOM's EBITDA Margin is 30.98%, which is greater than AMD's 20.56% but less than TXN's 44.64%. It is significantly greater than the industry average of -1954.9%.
- QCOM's Net Profit Margin is 25.75%, which is significantly greater than AMD's 6.36% but less than TXN's 30.21%. It is significantly greater than the industry average of -1877.28%.
- QCOM demonstrates strong profitability, particularly in net profit margin, relative to its size and revenue, outperforming AMD but lagging slightly behind TXN.
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Financial Health and Stability:
- QCOM's Current Ratio is 2.62, which is equal to AMD's 2.62 and less than TXN's 5.26. It is less than the industry average of 4.36.
- QCOM's Quick Ratio is 1.99, which is greater than AMD's 1.83 and less than TXN's 3.37. It is less than the industry average of 3.57.
- QCOM's Total Debt to Total Equity Ratio is 54.23, which is significantly greater than AMD's 4.03 and less than TXN's 78.31. It is less than the industry average of 64.26.
- QCOM's Debt / EBITDA is 1.16, which is greater than AMD's 0.32 and less than TXN's 1.79. It is less than the industry average of 13.03.
- QCOM maintains adequate liquidity and a manageable debt position relative to its market cap and peer group.
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Valuation and Market Perception:
- QCOM's Enterprise Value To Sales is 4.34, which is less than AMD's 7.82 and TXN's 10.75. It is less than the industry average of 12.24.
- QCOM's Enterprise Value To EBITDA is 14.01, which is less than AMD's 37.95 and TXN's 24.07. It is less than the industry average of 234.75.
- QCOM's Price To Earnings is 15.7, which is less than AMD's 95.83 and TXN's 30.46. It is less than the industry average of 67.67.
- QCOM's Price to Book Ratio is 6.04, which is greater than AMD's 2.71 and less than TXN's 8.91. It is less than the industry average of 6.09.
- QCOM's Price To Sales Ratio is 4.05, which is less than AMD's 6.1 and TXN's 9.18. It is less than the industry average of 14.31.
- QCOM appears undervalued based on its lower valuation multiples compared to its peers and industry averages.
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Cash Flow and Capital Management:
- QCOM's Net Operating Cash Flow is $13,840 million, which is significantly greater than AMD's $3,041 million and TXN's $6,150 million.
- QCOM's Total Capital Expenditure is $1,104 million, which is greater than AMD's $636 million and less than TXN's $4,695 million.
- QCOM's Free Cash Flow is $12,736 million, which is significantly greater than AMD's $2,405 million and TXN's $1,455 million.
- QCOM demonstrates strong cash flow generation capabilities, significantly outperforming its peers in net operating cash flow and free cash flow.
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Growth and Future Prospects:
- QCOM shows consistently lower growth in Sales/Revenue, EBITDA, Net Income, Basic Earnings per Share, and Free Cash Flow compared to the peer group average. However, QCOM shows consistently higher growth in Free Cash Flow Margin compared to the peer group average.
- QCOM's year-to-year growth rates exhibit significant fluctuations, as indicated by the standard deviations.
- QCOM's 3-year CAGR is lower than its 5-year CAGR for Sales/Revenue, EBITDA, Net Income, and Basic Earnings per Share, indicating a deceleration in growth over the most recent three years. However, QCOM's 3-year CAGR is higher than its 5-year CAGR for Free Cash Flow, Free Cash Flow Margin, and EBIT Margin, indicating an acceleration in growth over the most recent three years.
- QCOM's growth is not balanced across different metrics, with stronger growth in Free Cash Flow Margin but weaker growth in other key areas.
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Potential for Investment:
- QCOM presents an attractive investment opportunity due to its strong cash flow, high returns on equity, and robust earnings per share.
- While its growth rates are lower than some peers, its valuation metrics suggest that it may be undervalued by the market.
- Investors seeking a stable, profitable company with strong cash generation capabilities may find QCOM to be a compelling investment.
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Key Risks and Considerations:
- QCOM's lower growth rates in Sales/Revenue, EBITDA, Net Income, Basic Earnings per Share, and Free Cash Flow compared to peers may be a concern for investors seeking high-growth opportunities.
- QCOM's lower Current Ratio and Quick Ratio compared to TXN and the industry average may indicate potential liquidity risks.
- The significant year-to-year fluctuations in QCOM's growth rates suggest that its performance may be subject to volatility and uncertainty.
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Overall Assessment:
- QCOM exhibits strong financial health, characterized by robust cash flow generation, high returns on equity, and strong earnings per share.
- While its growth rates lag behind the peer average, its superior profitability and cash flow provide a solid foundation.
- QCOM's liquidity ratios are lower than some peers, but its overall financial position remains sound.
- QCOM holds a strong competitive position within the semiconductor industry, supported by its large market capitalization and superior financial performance.
Comparison metrics
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