QUALCOMM Incorporated (QCOM) DCF Valuation & Fundamental Primer
QUALCOMM Incorporated (QCOM) currently trades at $172.77 with an enterprise value of $213.12B. Our proprietary institutional model rates QUALCOMM Incorporated at 63/100 (Grade: B · Mixed Fundamental Profile). The current market price prices in an implied 5-year revenue CAGR of 5.0% vs. historical growth of 7.2% (Fairly Priced to Fundamentals).
Institutional fundamental teardown of QUALCOMM Incorporated (QCOM) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
QUALCOMM Incorporated (QCOM) 3-Scenario DCF Valuation Range
Stress-test QCOM's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $172.77).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $212.10 +23% | $225.51 +31% | $241.16 +40% | $259.65 +50% | $281.85 +63% |
| 9.3% | $190.15 +10% | $200.72 +16% | $212.85 +23% | $226.93 +31% | $243.45 +41% |
| 10.0% | $172.10 -0% | $180.59 +5% | $190.22 +10% | $201.23 +16% | $213.92 +24% |
| 10.8% | $156.98 -9% | $163.93 -5% | $171.72 -1% | $180.51 +4% | $190.52 +10% |
| 11.5% | $144.14 -17% | $149.90 -13% | $156.30 -10% | $163.46 -5% | $171.51 -1% |
Institutional Software Quality Scorecard (63/100 · Grade B)
Viable recurring software business but carries notable dilution, lower margins, or higher leverage.
Strong cash conversion; 100%+ of operating profit turns into free cash
Disciplined equity compensation well below software industry average
Sub-par gross margins; higher cost of delivery or hardware/services mix
Moderate leverage or cash burn; monitor liquidity runway
Core Investment Strengths & Moats
- High cash conversion: 100%+ of operating income converted to free cash flow
Key Operational & Dilution Risks
- Lower software gross margins (55.4%), indicating higher hosting or service delivery drag
Reverse-DCF Solver: What Growth is Priced Into QCOM?
Market implies 5.0% annual revenue growth over next 5 years (8.6% dilution-adjusted), in line with company run-rate.
Headline Reverse-DCF ignores Stock-Based Compensation (6.3% of revenue) and annual share dilution (0.8%/yr). Accounting for both requires 8.6% 5-year revenue CAGR to justify $172.77/sh on a true per-share economic cash flow basis.
QUALCOMM Incorporated (QCOM) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $44.28B | $44.28B | $47.46B | $50.86B | $54.51B | $58.42B | $62.61B |
| Gross Profit | $24.55B | $24.55B | $26.31B | $28.19B | $30.21B | $32.38B | $34.70B |
| Operating Income (EBIT) | $12.36B | $12.36B | $13.24B | $14.19B | $15.21B | $16.30B | $17.47B |
| Stock-Based Compensation (SBC) | $2.78B | $2.78B | $2.98B | $3.19B | $3.42B | $3.67B | $3.93B |
| Unlevered Free Cash Flow (FCF) | $12.82B | $12.82B | $13.74B | $14.72B | $15.78B | $16.91B | $18.12B |
| SBC-Adjusted True Cash Flow | $10.04B | $10.04B | $10.76B | $11.53B | $12.36B | $13.24B | $14.19B |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -21.6 + 0.66 × (Rule of 40) · R² = 79%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| QUALCOMM Incorporated | QCOM | $185.04B | $44.28B | 55.4% | 28.9% | 36.1% | 6.3% | 4.4× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 4.4× | $194.33B | $185.04B | $172.77 | 0.0% |
| -20% Multiple Compression | 3.5× | $155.46B | $146.17B | $136.48 | -20.0% |
| -35% Multiple Compression | 2.9× | $126.31B | $117.02B | $109.26 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $221.42B | $212.13B | $198.07 | +13.9% |
Frequently Asked Questions: QUALCOMM Incorporated (QCOM) Valuation
What is QUALCOMM Incorporated (QCOM)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, QUALCOMM Incorporated (QCOM) has a Base Case implied value of $190.32 per share (with a Bear Case of $102.08 and a Bull Case of $291.63), compared to its current price of $172.77. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is QUALCOMM Incorporated (QCOM)'s Rule of 40 score and Free Cash Flow margin?
QUALCOMM Incorporated achieves a Rule of 40 score of 36.1%, combining a 7.2% revenue growth run-rate with a 28.9% TTM free cash flow margin on $44.28B in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into QCOM stock according to Reverse-DCF analysis?
At $172.77 per share (Enterprise Value of $194.33B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 5.0%, compared to QUALCOMM Incorporated's historical CAGR of 7.2%. Overall market expectations are rated as "Fairly Priced to Fundamentals".
How does QUALCOMM Incorporated compare to Software & Cloud Services software peers?
QUALCOMM Incorporated (QCOM) earns an institutional Software Quality Score of 63/100 (Grade B — Mixed Fundamental Profile). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact QUALCOMM Incorporated (QCOM)'s valuation?
QUALCOMM Incorporated recorded $2.78B in TTM stock-based compensation (6.3% of revenue). When treating SBC as a cash-equivalent compensation expense, QUALCOMM Incorporated's SBC-adjusted free cash flow yield is 5.4%, scoring 21/25 on our Shareholder Dilution Friction pillar.