Qualcomm (QCOM)

Investment Review After Q2 FY2026 Earnings (stock price as of 2026.04.29)

TL;DR

Qualcomm designs Snapdragon mobile SoCs and modems for premium Android phones, supplies Snapdragon Digital Chassis chips for automotive (cockpit + ADAS), grows in IoT/PCs (Snapdragon X), and licenses 3G/4G/5G patents to virtually every handset OEM (QTL). Q2 FY2026: revenue $10.6B (-3% YoY), QCT $9.1B with record auto $1.3B (+38% YoY), IoT $1.7B (+9%), handsets $6.0B (under-shipped on China/memory dynamics); QTL $1.4B (72% EBT margin); non-GAAP EPS $2.65 at high end; returned $3.7B to shareholders. Stock $156 at P/E(ttm) 17x — below 5-year mid-range, 5-yr stock essentially flat (+3%) versus TTM OP +48%. Main risks: Apple modem step-down to ~20% share in fall 2026 (~$2B FY2027 product revenue) with no relationship beyond, China-driven memory inventory drawdown bottoming in Q3 FY2026, and mature smartphone TAM with mid/low-tier weakness.

Summary

Finding	Assessment
5-Year Stock Return	Stock currently $156, vs. $152 (Q2 2021, 5 years ago). +3% over 5 years — essentially flat. TTM OP +48% ($7.7B→$11.4B). P/E(ttm) compressed 26x→17x. Stock has gone nowhere despite strong fundamentals.
Business Model	STRONG. World’s leading mobile SoC designer + 5G patent licensor. QCT (~87%): Handsets 63%, Auto 9%, IoT 15%. QTL (13%): 72% EBT margin licensing. Fabless (TSMC/Samsung). Auto run-rate >$5B exit Q2.
Competitive Moat	NARROW. Dominant premium Android SoC + essential 5G patents. But Apple modem step-down to ~20% in fall 2026 (no product beyond) and ~46% China exposure. MediaTek mid-tier; NVIDIA/Mobileye in auto.
Past 5-YR Drivers	Premium Snapdragon ASP expansion; Auto from ~$1B to >$5B run-rate; QTL licensing renewals at 72% margins; IoT/PC diversification (Snapdragon X2, Dragonwing IQ10).
Recent Stock Move	Stock currently $156, vs. $170 (Sep 2024). TTM OP +10% but QoQ negative for 2 quarters. P/E(ttm) compressed 19x→10x. Memory-driven China handset under-shipment + Apple modem confirmation drove the de-rating.
Revenue Trend	FLAT Rev YoY: -3% (Q2 FY2026) → -3% (Q3 2026E).
Margin Trend	EXPANDING OM%: 22% (Q2 FY2026) → 27% (Q3 2026E).
TTM OP Trajectory	ACCELERATING TTM OP QoQ: -6% (Q2 FY2026) → -1% (Q3 2026E). TTM OP $11.4B.
Key Opportunities	Auto >+50% YoY; Snapdragon X2 PCs; data-center custom silicon shipping Dec 2026. Auto exits FY2026 >$6B run-rate. Multi-gen hyperscaler engagement, accretive to OM. Investor Day June 24th.
Key Risks	Apple modem ~20% in fall 2026 (~$2B FY2027), no product beyond. China handset under-shipment Q2-Q3 FY2026; mid/low-tier handset weakness; ~46% China revenue exposure; royalty renegotiation pending.
Catalysts	Q3 FY2026 print (China bottom), Investor Day June 24th (data-center roadmap, FY2029 targets), December custom silicon ramp, Snapdragon X2 PC traction, 5th-gen Auto launch by FY2026 year-end.
P/E(ttm) Valuation	LOW at 17x (5-year range: 14x-24x). Below mid-range. Market pricing in Apple modem loss + China weakness + flat handset TAM. If auto/PC/data-center deliver, multiple re-rating to 22x is the swing factor.

Q2 FY2026 Key Data

Revenue $10.6B (-3% YoY); EPS $2.65 high-end. QCT $9.1B (EBT 27%): Handsets $6.0B, Auto $1.3B (+38% record), IoT $1.7B (+9%). QTL $1.4B (72% EBT).
OM 22% (TTM OP $11.4B, -1% QoQ); FCF/OP 109%. $5.7B non-cash tax benefit excluded from non-GAAP. Returned $3.7B ($2.8B buybacks + $945M dividends).
Q3 guide: rev $9.2-10.0B, EPS $2.10-2.30; handsets ~$4.9B (China bottom). Auto ~+50% YoY; IoT high-single-digit YoY; QTL $1.15-1.35B (low-tier weakness).

Key Takeaways from Earnings Call

Apple modem unchanged: ~20% share fall 2026, no product beyond; ~$2B FY2027 QCT. Royalty separate, unchanged pending renegotiation. Largest long-term overhang now quantified.
Auto exited Q2 >$5B annualized; expected >$6B run-rate exit FY2026. 5th-gen Snapdragon Digital Chassis ships year-end (3x CPU/GPU, 12x NPU). Auto +50% YoY Q3; >1M cars on Ride ADAS.
Custom silicon ramps with hyperscaler in Dec quarter; multi-gen, accretive to OM. Snapdragon X2 PCs in production (85 TOPS, +30% vs Panther Lake). Investor Day June 24th.

Key Segments and Revenue Mix (FY2025)

Segment	Revenue	% of Total	Key Details
QCT — Handsets	$27,793M	63%	Snapdragon mobile SoCs; +12% YoY FY2025; premium tier; ~70%+ Samsung share (multi-year framework); mid/low-tier softer
QCT — Automotive	$3,957M	9%	Snapdragon Digital Chassis 4G/5G; +36% YoY FY2025; >$5B run-rate exit Q2 FY2026; BMW/VW/Bosch/Wayve partnerships
QCT — IoT	$6,617M	15%	Snapdragon X PCs, smart glasses, industrial/edge AI; +22% YoY FY2025; Dragonwing IQ10 (700 TOPS) for robotics
QTL (Licensing)	$5,582M	13%	3G/4G/5G patent licensing; flat YoY; 72% EBT margin; Apple royalty unchanged pending renegotiation
Total FY2025	~$43,900M	100%	+14% YoY. QCT EBT margin ~30%. Record auto, IoT. $11.4B Q2 FY2026 TTM OP.

Business Model

SUPPLIERS

TSMC, Samsung (fab partners)
DRAM/NAND suppliers
RF component makers
IP licensors & partners

Wafers / Components →

QUALCOMM

Snapdragon mobile SoCs (fabless)
Snapdragon Digital Chassis (auto)
QTL patent licensing (3G/4G/5G)
AI/edge computing platforms
Fabless: designs chips, outsources mfg

Chipsets / Licenses → $ Revenue

CUSTOMERS

Samsung, Xiaomi, Oppo, Vivo (handsets)
VW, BMW, Toyota, Hyundai (automotive)
PC OEMs (Dell, HP, Lenovo, ASUS)
Hyperscalers, robotics (Figure, Nuro)
All 5G handset OEMs (licensing)

Moat Assessment: NARROW

Snapdragon is the dominant premium Android SoC platform with deep OEM integration. MediaTek competes effectively in mid-tier but lacks Snapdragon’s premium positioning, AI/NPU performance (Hexagon 85 TOPS), and integrated modem leadership. However, Apple’s custom modem ramp (step-down to ~20% in fall 2026, no relationship beyond) shows that sufficiently motivated customers can replicate key Snapdragon capabilities.
QTL’s 3G/4G/5G patent portfolio creates a licensing moat, but renewal risk is constant. Every 5G handset shipped globally owes Qualcomm a royalty, creating a ~$5.6B annual revenue stream at 72% margins. Apple royalty negotiation is the largest binary — royalty is treated as independent of chip business and not expected to change pending renegotiation.
Automotive run-rate exceeding $5B with 5th-gen platform creates multi-year revenue visibility but faces growing competition. Snapdragon Digital Chassis is winning across cockpit, ADAS (BMW, Bosch, Wayve), and connectivity, with 5th-gen delivering 3x CPU/GPU and 12x NPU uplift. But NVIDIA (Drive), Intel/Mobileye, and in-house OEM solutions are intensifying competition; auto is still ~10% of total revenue.

Stock vs. Earnings — 5-Year Performance

Stock currently $156, vs. $152 (Q2 2021, 5 years ago) — essentially flat (+3%). Despite delivering record automotive and IoT revenues, expanding TTM OP from $7.7B to $11.4B (+48%), and aggressive buybacks ($30B authorization), QCOM has gone nowhere over 5 years. The stock peaked at $200 in Jun 2024 before falling 36% on memory shortages, Apple modem clarity, and decelerating handset growth.
TTM OP grew from $7.7B to $11.4B (+48%) over 5 years, driven by premium Snapdragon mix, automotive ramp, and QTL licensing renewals. Operating margins held in the mid/high-20% range despite handset volume cyclicality. Q2 FY2026 OM dipped to 22% on under-shipment, but Q3 guidance implies recovery to ~27%.
P/E(ttm) compressed from 26x to 17x as the market priced in Apple modem loss and slowing handset TAM. FCF/OP ttm at 109%; Debt/EBITDA at 1.0x. Returned $3.7B to shareholders this quarter alone. The 17x multiple is below the 5-year mid — modest re-rate room if auto/PC/data-center growth offsets handset weakness.

QCOM 5-year stock vs TTM Operating Income

Past 5-Year Key Drivers

Premium Snapdragon platform leadership drove handset ASP expansion despite flat unit market. Handsets revenue grew from ~$20B to $28B as Qualcomm captured share in the premium/high-tier segment through dual flagship strategies. Samsung >70% multi-year framework and broad Android OEM adoption of Snapdragon 8 Elite drove higher revenue per chipset even as total handset units remained flat.
Automotive emerged as the fastest-growing segment, exiting Q2 FY2026 at >$5B annualized run-rate. QCT Automotive revenue grew from ~$1B to >$5B run-rate in 5 years (+38% YoY in Q2 FY2026), driven by Snapdragon Digital Chassis adoption across cockpit, ADAS, and connectivity. 4th-gen ramp underway; 5th-gen ships by FY2026 year-end. >1M cars on Snapdragon Ride ADAS.
QTL licensing provides a high-margin earnings floor at 72% EBT margin. The $5.6B licensing business generates ~$4B in annual earnings with minimal incremental cost. Long-term license agreements with key Chinese OEMs secured the revenue base; Apple royalty unchanged pending renegotiation, treated as independent of chip business.

Quarterly Key Metrics

USD	Q2'24	Q3'24	Q4'24	Q1'25	Q2'25	Q3'25	Q4'25	Q1'26	Q2'26	Q3'26
Quarter End	Mar 2024	Jun 2024	Sep 2024	Dec 2024	Mar 2025	Jun 2025	Sep 2025	Dec 2025	Mar 2026	Jun 2026
Stock Price	$172	$200	$170	$154	$154	$159	$166	$171	$129	$156
Stock QoQ	+22%	+16%	-15%	-10%	0%	+4%	+4%	+3%	-25%	+21%
Rev YoY	+1%	+11%	+19%	+17%	+17%	+10%	+10%	+5%	-3%	-3%
OM%	25%	25%	28%	30%	28%	27%	26%	27%	22%	27%
R40 (Rev YoY + OM%)	+26%	+36%	+46%	+48%	+45%	+37%	+36%	+32%	+19%	+23%
TTM OP ($M)	9,908	10,460	10,432	11,087	11,867	12,258	12,394	12,205	11,423	11,327
TTM OP QoQ	-2%	+6%	0%	+6%	+7%	+3%	+1%	-2%	-6%	-1%
FCF/OP ttm	124%	120%	107%	115%	99%	95%	103%	106%	109%	112%
Debt/EBITDA	1.1x	1.0x	1.0x	0.9x	0.9x	0.9x	0.9x	0.9x	1.0x	1.0x
P/E(ttm)	22x	24x	19x	16x	15x	15x	16x	17x	14x	17x

Recent Stock Performance & Drivers

Stock currently $156, vs. $170 (Sep 2024). QCOM peaked at $200 in Jun 2024, then declined 36% to $129 in Q2 2026 on memory-driven handset under-shipment and Apple modem confirmation. The stock rebounded +21% to $156 in Q3 2026E as the market priced in the China handset bottom and accelerating auto/data-center momentum.
TTM OP grew from $10.4B to $11.4B (+10%) but turned QoQ negative in Q1-Q2 FY2026 as handset under-shipment hit. Revenue YoY decelerated from +19% (Q4'24) to -3% (Q2'26) as China OEMs drew down channel inventory. Auto +38% YoY and IoT +9% partially offset; Q3 FY2026E TTM OP -1% QoQ implies the trough is in.
P/E(ttm) at 17x — below the 5-year mid (14x-24x range). The 17x multiple prices in Apple modem loss + China handset weakness + smartphone TAM maturity. With auto exit run-rate >$6B, custom silicon shipping in December, and Snapdragon X2 in production, multiple expansion is the swing factor.

Opportunities

Auto accelerating to ~+50% YoY Q3, exits FY2026 >$6B run-rate. 5th-gen Snapdragon Digital Chassis (3x CPU/GPU, 12x NPU) ships year-end — largest gen-over-gen content increase ever. Chip-to-SiP + software lifts margin. BMW, Bosch, Wayve.
Snapdragon X2 PCs in production: 85 TOPS NPU, +30% vs Panther Lake. Agentic workloads (Claude Desktop, OpenAI Codex, Perplexity, LangGraph) run on X2; CPU-bound agentic orchestration is QCOM's edge. Smart-glasses inflection H2.
Custom silicon ramp with hyperscaler begins Dec 2026; multi-gen, accretive to OM. Alphawave adds connectivity IP; merchant+custom+ASIC strategy. Investor Day June 24th: Oryon CPU, AI inference accelerators, 6G (silicon 2028, scale 2030).

Challenges

Apple modem step-down to ~20% in fall 2026, no product beyond — ~$2B FY2027 QCT. Largest long-term overhang now quantified. Apple royalty (separate, unchanged pending renegotiation) is the next binary for QTL licensing.
China handset under-shipment: Q2-Q3 FY2026 QCT shipments materially below end demand. OEMs drawing down inventory on memory dynamics. Q3 handsets ~$4.9B (vs. $6.0B Q2). Mid/low-tier weak; premium holding. China bottoms Q3, grows Q4.
Rev YoY turned negative (-3%) for first time since FY2023; mature smartphone TAM. R40 fell 48% (Q1'25) to 19% (Q2'26). TTM OP QoQ negative 2 quarters. Re-acceleration depends on China memory normalization + auto/PC/DC ramp.

Next 12 Months

Q3 FY2026 guided $9.2-10.0B rev, EPS $2.10-2.30; auto ~+50% YoY, handsets ~$4.9B. A beat with handsets above $4.9B would signal inventory drawdown is shorter than feared and could re-rate the multiple from 10x toward 15-17x.
Investor Day June 24th: data-center roadmap, custom silicon, robotics, 6G, FY2029 targets. Compelling Oryon CPU benchmarks + multi-gen hyperscaler agreement could be a re-rating catalyst given current 17x P/E.
Custom silicon shipments to hyperscaler begin Dec quarter; material DC revenue H2 FY2027. Combined with auto >$6B exit run-rate and Snapdragon X2 PC ramp, FY2027 guides will show diversification away from handset cyclicality.

Next 12-24 Months

Apple modem step-down (~$2B FY2027) is largest binary; royalty (separate) is next. Any sign Apple delays/narrows custom modem rollout would be meaningful upside. Royalty renegotiation outcome sets long-term ceiling/floor on QTL.
Memory normalization CY2026/2027 unlocks pent-up handset demand; agentic phones a premium tailwind. ByteDance Doubao + Xiaomi MiClaw agent frameworks signal AI upgrade cycle. China sequential growth from Q4 FY2026.
Data-center revenue starting FY2027 could transform QCOM's growth narrative. Oryon CPU + AI inference accelerators + Alphawave IP + merchant-and-custom strategy — accretive OM. 6G prototype 2028, scale 2030.

Core Metrics Scorecard

	Q4'21	Q1'22	Q2'22	Q3'22	Q4'22	Q1'23	Q2'23	Q3'23	Q4'23	Q1'24	Q2'24	Q3'24	Q4'24	Q1'25	Q2'25	Q3'25	Q4'25	Q1'26	Q2'26	Q3'26
Quarter End	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24	Jun24	Sep24	Dec24	Mar25	Jun25	Sep25	Dec25	Mar26	Jun26
R40 > 40%	✅	✅	✅	✅	✅								✅	✅	✅
R40 accelerate		✅	✅		✅				✅	✅		✅	✅	✅						✅
TTM OP QoQ > 10%		✅	✅
TTM OP QoQ accelerate		✅	✅		✅			✅		✅		✅		✅	✅					✅
TTM FCF/OP > 60%	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅
Debt/EBITDA < 3.5	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅
Total passes	3	6	6	3	5	2	2	3	3	4	2	4	4	5	4	2	2	2	2	4
Stock QoQ	-10%	+42%	-16%	-16%	-12%	-5%	+19%	-7%	-7%	+26%	+22%	+16%	-15%	-10%	0%	+4%	+4%	+3%	-25%	+21%
P/E(ttm)	16x	21x	16x	12x	11x	11x	15x	15x	15x	19x	22x	24x	19x	16x	15x	15x	16x	17x	14x	17x

QCOM’s scorecard is dominated by the FCF/OP >60% and Debt/EBITDA <3.5x passes, which have never failed in 20 quarters. These provide a stable 2-pass floor. The swing metrics are R40 >40% and R40/OP acceleration, which align tightly with stock direction. Q3-Q4 2025 dropped to 2 passes (the trough); Q3 2026E recovers to 4 as R40 acceleration and OP-QoQ acceleration return.
R40 has fallen below 40% for 7 consecutive quarters (since Q3 2025), driving the multiple compression from 16x to 10x. Revenue YoY turned negative (-3%) in Q2 2026 for the first time since FY2023; without a return to >40% R40, the scorecard caps in the 2-4 pass range. Auto + PC + data-center are the swing factors that could push R40 back above 40%.
Current 4-pass reading (Q3 2026E) is the best since Q1 2025 and matches the level that historically corresponded to mid-teens P/E. If China handset normalization, auto exit run-rate >$6B, and December custom silicon shipments deliver, R40>40% returns and the scorecard could reach 5-6 passes — the level that historically supported P/Es of 16-21x.

Chart: R40 vs Stock Price (Since 2020)

Chart: Scorecard Total Passes vs Stock Price (Since 2020)

QCOM Scorecard Total Passes vs Stock Price

Source: SEC EDGAR annual and quarterly filings, company earnings conference calls and presentations.

Disclaimer: This report is for educational purposes only. NO investment advice.