Qualcomm (QCOM, Halal, B+) develops and designs technologies, semiconductors, and software for wireless communications, dominating the mobile chipset market. It enables 5G, AI, automotive connectivity, and IoT devices, holding extensive patents crucial to cellular standards. Qualcomm is also one of the biggest technology companies, with a market cap of $183.71 billion in 2025 and a current price of $137.34 per share (Musaffa).

Business analysis

The main revenue of the company comes from two segments: Equipment and Services and Licensing. Equipment and Services primarily represents sales from the Qualcomm CDMA Technologies sector, including Snapdragon processors for handsets, IoT devices, and automotive chips (Market Screener). This segment’s revenue is significantly higher than its Licensing revenue because they are different business models from each other: the former sells physical hardware at high volumes, while the latter collects high-margin royalties on intellectual property. Snapdragon processors and modems of the company lead to a significant increase in revenue of QCT. For example, the Snapdragon 8 Elite, powering flagship devices for Samsung and other brands, is expected to be a major contributor to increased revenue in Q1 2026. Likewise, as more cars become digital, revenue grows. Qualcomm recently signed a big deal with Volkswagen Group to provide technology such as advanced driver-assistance systems (ADAS) and others for their devices (Qualcomm). When it comes to Licensing, the company receives royalties on every 5G device sold worldwide, since it owns foundational patents for 5G.

From the geographical side, the main revenue driver of the company is China (including Hong Kong), followed by the United States and other countries. In China, there are many major smartphone brands such as Xiaomi, OPPO, Vivo, and Honor, to which the company sells its chips.

Financial Analysis

From the income side of the company, last year, the revenue of the company increased gradually. In addition, net income and EBIT were nearly the same in the last three years, except for net income in 2025.

Net income in 2025 decreased considerably to $5.54 billion compared to $10.14 billion in the previous year. This decline was mainly due to a one-time, non-cash tax charge. In Q4 2025, the company recorded a $5.7 billion expense to establish a valuation allowance against its U.S. federal deferred tax assets. Even though there was a huge decline in net income, the company’s operating performance is strong. Total revenue rose by 13.65% to $44.3 billion, while operating income grew by 21% to $12.4 billion in 2025 (Q4 2025).

According to the data, the company’s earnings beat market expectations over the period, which is a good signal for investors. The company’s earnings for Q1 fiscal 2026 also beat market expectations because of record-breaking revenue in its Automotive and IoT segments (Yahoo Finance). Despite beating market expectations, the company faced pressure because of a global memory shortage (DRAM). In addition, it is expected that this issue will impact Qualcomm’s EPS for the next quarter (Q2 2026).

Valuation Analysis

In 2025, the P/E ratio of the company was 33.21, which is below the industry average. The P/E ratio mainly shows how much investors are willing to pay for $1 of profit. This high valuation multiple primarily comes from increasing stock prices due to strong operating results. In addition, the EV-to-revenue ratio was 4.14, which was mainly influenced by strong revenue growth. As mentioned before, the company reported revenue of about $44.3 billion for fiscal 2025. This revenue growth supports the enterprise value-to-revenue ratio by depicting operational performance more accurately than the P/E ratio.

The current ratio of the company consistently increased over the period, reaching 2.82 in 2025, which indicates strengthened liquidity and efficient management of liabilities. Likewise, the interest coverage ratio was 18.67, which indicates a strong ability of the company to manage its debt. This was mainly driven by enhanced operating income from record Equipment and Services revenue segments.

Risks

There are several risks that should be considered when making investment decisions in the company:

1. As mentioned above, one of the main risks of the company is the global shortage of dynamic random-access memory (DRAM) chips, which are a main component of phones and PCs. This is expected to affect the company’s chipset orders and revenue (Yahoo Finance).
2. In addition, Qualcomm uses a “fabless” production approach, which means it heavily relies on third-party suppliers. This approach leads to risks from geopolitical conflicts and natural disasters in some manufacturing locations such as Taiwan (Trefis).
3. Another significant risk that impacts the company’s revenue is the development of Apple’s modem chips, as these chips are expected to replace Qualcomm’s modems in future iPhones (Nasdaq).

Bottom line

The company remains a strong and well-diversified technology company with higher revenue growth, and market-leading positions in 5G, Automotive and IoT. While there are several risks such as the global DRAM shortage and expected loss of Apple modem business may impact on earnings, revenues and performance, the company’s strong operating performance, licensing income and diversification support its long-term growth.

Sources

1. Musaffa- Qualcomm Inc. Stock Analysis.
2. Market Screener- Qualcomm : Annual Report for Fiscal Year Ending 09-28, 2025 (Form 10-K).
3. Qualcomm- Volkswagen Group and Qualcomm Sign Letter of Intent to Power Next Generation Driving Experiences.
4. SEC gov- Qualcomm Q4 2025 report.
5. Yahoo Finance- Qualcomm Surpasses Q1 Earnings Estimates on Record Revenues.
6. Yahoo Finance- Qualcomm: A tough start to 2026 in prospect after Q4 earnings beat.
7. TREFIS- A Money Making Strategy for Qualcomm’s Memory Crisis.
8. Nasdaq- Qualcomm's Risks And Opportunities

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