---
ticker: "QCOM"
company: "QUALCOMM Incorporated"
date: "2026-10-15"
view: "Hold"
fair_value: 171.39
price: 178.4
price_source: "last trade"
price_time: "2026-10-15T19:59:59Z"
price_vs_fair_value: "+4.1%"
bear: 56.51
bull: 322.15
exit_price: 233.19
restated: "2026-10-26"
method: "case-spread-2026-10-24"
original_fair_value: 138
original_view: "Avoid"
page: "https://alpha.dming.si/research/2026-10-15-qcom-2"
---

# QCOM · QUALCOMM Incorporated · Hold

Research report as of 2026-10-15, unblinded. Page: https://alpha.dming.si/research/2026-10-15-qcom-2

We value QCOM at $171 a share. The report's $178.40 price (Oct 15, 2026) was 4% above fair value: Hold.

_Restated Oct 26, 2026 (method case-spread-2026-10-24); the report's original value was $138, Avoid._

| Lens | Range | Marks |
| --- | --- | --- |
| Our report | $56.51 to $322 | fair $171; original $138 |
| Street targets (14) | $120 to $400 | average $204, median $190 |
| Price | | $178.40 |

Bands run from our bear to bull (the hollow mark is the original $138) and the Street's low to high. Street targets forecast future prices, not value today. Market data, captured Oct 16, 2026.

| Figure | Value |
| --- | --- |
| Fair value | $171 |
| Price | $178.40 (market data, Oct 15, 12:59 PM PT) |
| Five-year return | 10.0% (a year, at the report's price) |
| Bear / bull | $56.51 / $322 |
| Exit price | $233 (on Sep 28, 2031) |
| Confidence | 30% |

_This text argues the original call. The current figures are at the top._

**Original call, Oct 15, 2026 (before the Oct 26, 2026 restatement)**

_As of 2026-10-15 · unblinded correction of docs/research/2026-10-15-qcom ($141), whose model was blinded (valued before we looked at the price; commit blind value $129). This version fixes two inputs to the long fade (the model's multi-year slowdown of growth and returns after the forecast years): its starting return and its mature return. Both were fixed after the price was read (section 1)._

- **Fair value today:** $138 per diluted share (cost of equity 10.83%)
- **Price:** $178.40, last regular-session trade, 2026-10-15T19:59:59Z → fair value 22.7% below the price
- **Five-year exit price:** $175 on 2031-09-28 (end of fiscal 2031), from the 15-year long fade; 10 years $164, 20 years $186. Two checks, not averaged in: the outside view (what similar companies trade at) $330 (rate-adjusted $187); and the value-driver formula, which implies 33.9x against the fade's 14.8x fiscal 2032 after-tax operating profit
- **Five-year return:** +4.5% a year from today's price, distributions included
- **Purchase price:** $132 to earn the 12% hurdle (the yearly return we require)
- **Bear / bull today:** $48 / $230 from coherent operating cases (case-weighted 25/50/25: $138)
- **Confidence:** 30% (subjective, not calibrated): chance the fiscal 2031 value lands within ±20% of the $175 exit price
- **Moat:** Cellular patent licensing (QTL, about 70% margin) and the premium Android phone-chip position; both narrowing as Apple and Chinese phone makers build their own
- **Market expects:** Our after-tax operating profit (NOPAT) 26% higher in every year (fiscal 2031 EPS about $14.2 against our $11.2), or 20.2x fiscal 2032 NOPAT at exit against the fade's 14.8x
- **Key driver:** The fiscal 2031 profit level: ±10% of NOPAT is −$16 / +$16 a share; the swing item is data center chips ($10B in fiscal 2029 in our forecast, $15B in management's target)
- **Alpha model:** Rank 227 of 713, score 68.3 (Above Average); momentum A, valuation B, quality C, growth D, expectations D (as of 2026-10-15)
- **Street:** 40 analysts, mean target $196.73 (range $100–400), 13 buy / 23 hold / 4 sell, market data, updated 2026-09-29; an expectations reference only

**We still rate Qualcomm Avoid: at $178.40 the price is 22.7% above our fair
value of $138, and the central case returns 4.5% a year, under the 10.83%
cost of equity.** This report corrects
[our 2026-10-15 report](https://alpha.dming.si/research/2026-10-15-qcom), which went out in the
17:13 publish at $141 and stays as published. The operating forecast,
capital structure, cost of capital and view are unchanged. Two errors in
the long fade are fixed, and the value falls $3.

**How to read the cases.** Each report values a company three ways. The
central case is our best estimate. The bear case is a severe but plausible
bad outcome. The bull case is the matching good outcome. The central case
sets the view; the bear and bull show how far the value could move.
Qualcomm's fiscal year ends in late September, so "fiscal 2031" ends on
2031-09-28. QCT is Qualcomm's chip business and QTL its patent-licensing
business.

## 1. Two errors in the long fade lowered the value by $3

The fade is how the model values Qualcomm after the five forecast years: it
lets the return earned on new capital, and growth, drift to a mature level
over 15 years. Two of its inputs were wrong.

**Error 1: the fade started at the blended return.** The published model
started the fade's return on new capital at the 57% the forecast years earn
in total (after-tax operating profit up $4,684M from fiscal 2027 to fiscal
2031 on $8,254M of capital added). About 38% of that rise is margin gained
on revenue Qualcomm already had (QCT excluding data center 27% → 29%, data
center 2% → 21% on its $4B base, unallocated costs 9.5% → 8% of revenue,
Arm's royalty cost starting). The fade holds margins flat, so it must start
at the volume-only return: new revenue at fiscal 2031 segment margins, after
unallocated costs and tax, over the capital added. The model now computes it
per case: central 35% ($2,919M over $8,254M), bull 64%, bear negative (so
the bear still starts and stays at its 15% mature return). An outside
reviewer measured 34%; the point between is Arm's $100M a year from fiscal
2028, which we treat as a cost on the existing business, not volume ($86M
after tax). The rule is in our valuation rules (valuation.md as of
d3f682a17).

**Error 2: the mature return counted securities as operating capital.** The
22% came from fiscal 2016, when $13.7B of long-term securities sat in
invested capital; without them fiscal 2016 earned 49%. On one basis for
every year (equity plus debt less cash, short-term and long-term
investments; operating income at 15% tax; market data statements), fiscal 2016–25
returns were 49%, 16%, 10%, 76%, 50%, 60%, 49%, 25%, 30%, 42%. The lowest
outside the fiscal 2017–18 licensing-dispute years is fiscal 2023, the last
handset trough, at 25.1%. The model now computes this from the statements
and uses it for the central and the bull (whose blind 25% it matches); the
bear keeps 15%, our judgment of a worse business.

| Step | Central fair value | Exit | Purchase | Bear | Bull |
| --- | --- | --- | --- | --- | --- |
| Published 2026-10-15 (blended start, mature 22% central, 25% bull) | $140.61 | $179.78 | $134.30 | $47.71 | $233.04 |
| Fade starts at the volume-only return (35% central, 64% bull) | −$4.15 → $136.46 | $172.88 | $130.36 | $0 | −$3.34 → $229.70 |
| Central mature return 22% → 25.1% (fiscal 2023, consistent basis) | +$1.51 → $137.97 | $175.39 | $131.79 | $0 | $0 (25% → 25.1%) |
| This report | **$138** | **$175** | **$132** | **$48** | **$230** |

Measured by switching each step in a scratch copy of model.py.
Neither step rests on the price; together they move the value $3 further
from it.

## 2. Our forecast gives $138; the outside-view checks sit higher

The operating cases are the published ones (business, results, forecast
lines and their evidence: sections 1–3 of the
[2026-10-15 report](https://alpha.dming.si/research/2026-10-15-qcom);
assumptions.md is the blind record).
Model model.py, output output.txt; after-price
arithmetic unblinded.py (output).

| Case | Fiscal 2031 revenue | Fiscal 2031 EPS (GAAP-like) | Fade starts / mature | Fade 10 / 15 / 20 years | Outside view (check) | Fair value | Five-year return from $178.40 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Bear | $43.0B | $4.89 | 15% / 15% | $50 / $49 / $49 | $144 | $48 | −19.0% a year |
| Central | $64.5B | $11.21 | 35% / 25% | $164 / $175 / $186 | $330 | $138 | +4.5% a year |
| Bull | $81.8B | $16.62 | 64% / 25% | $277 / $311 / $344 | $489 | $230 | +17.3% a year |

**Checks.** The outside view (peer ten-year median GAAP P/E 29.4x on fiscal
2031 EPS) is $330, 89% above the fade. Most of the gap is rates: the peers'
decade had a ten-year yield near 2.5% against 5.1% now, and moving the
earnings yield by the difference gives 16.7x and $187, 7% above the fade.
The rest is the peer set: AVGO, MCHP and ADI earn their multiples on
amortisation-cut GAAP earnings and analog franchises. We believe the fade.
The value-driver formula gives 33.9x because growth at exit (8.3%) sits near
the cost of capital (WACC, 10.30%); the fade carries that growth down to 3%,
and its 14.8x implies 4.8% for ever at the mature return. Qualcomm's own
ten-year median P/E (18.7x, read after the price) on our fiscal 2031 EPS
gives $159, still 11% below the price.

Cost of equity 10.83%: 5.10% ten-year Treasury (2026-10-15) + peer median
Blume beta 1.36 × 4.20% Damodaran implied premium (2026-10-01). Own Blume
beta 1.38: $137, purchase $131. Damodaran's semiconductor beta 1.52 (January
2026): $125, purchase $123.

## 3. The price needs 26% more profit than we forecast

At the 10.83% cost of equity: central NOPAT ×1.26 in every year (fiscal 2031
NOPAT $15.9B against our $12.6B; fiscal 2031 EPS $14.17 against $11.21), or
an exit of $243, 20.2x fiscal 2032 NOPAT against the fade's 14.8x. The
Street's fiscal 2027 revenue matches ours within 0.5%; by fiscal 2029 ours
is 13% lower on revenue and about a third lower on EPS, the gap between our
data center and IoT paths and management's Investor Day targets
(unblinded-output.txt; the vendor's fiscal 2030 row is not a real estimate and is
left out).

## 4. Three results settle whether we are wrong

1. **Fiscal 2027 data center revenue against $5B,** and the first accelerator
   silicon in customers' hands (mid-2027 on the company's plan).
2. **Fiscal 2027 non-handset growth** against the company's "greater than
   60%" (our central +50%, $20.0B from $13.3B).
3. **Android after the memory shock:** whether fiscal 2027 handset revenue
   excluding Apple grows (our +7%) or falls again.

**Bear ($48):** Android flat then shrinking, data center stuck at $2–5B,
QTL renewals 15% lower in fiscal 2028, QCT margins held at 24%, Arm costing
$400M a year, tax 16.5%. **Why the bulls could be right ($230):** Qualcomm
has beaten its own guide in 7 of 8 quarters, beat its 2021 automotive target
by 60%, and has Amazon tied to up to $60B of purchases over ten years; if
data center reaches the $15B fiscal 2029 target it is a second franchise.

## 5. Catalysts and what would show us wrong

- **2026-11-04, after the close:** Q4 fiscal 2026 results (market data
  earnings calendar, marked verified; not confirmed on the company site).
  Our forecasts are unchanged: revenue $10,350M (range $10,000–10,700M),
  non-GAAP EPS $2.22 ($2.10–2.35), QCT handsets $5,304M, automotive
  $1,685M, QTL $1,319M.
- **Q1 fiscal 2027 results (early February 2027, expected, not confirmed):**
  first Amazon custom-silicon revenue and the Apple step-down.
- **2027-04-01:** the renewed Apple licence takes effect (terms not
  disclosed).
- What would show us wrong: fiscal 2027 data center at or above $5B with
  accelerator silicon at customers (move toward the bull); fiscal 2027
  non-handset revenue above $21.3B; fiscal 2027 Android handset revenue down
  again (weight the bear); a disclosed QTL renewal at a lower rate.

## 6. What the reviewers questioned, and how it came out

A checklist review of the work raised or cleared these points.

- **The move from the blind $129 to $138 (+$9), a medium concern.** The
  largest change since the blind step is the fade starting at the
  forecast's own return (now volume-only, +$1.6 against the blind 30% start;
  the published report's blended start was +$5.9). Every change rests on a
  method rule or a filing line, none on a management claim or a Street
  figure; the review answers are in section 9 of the published report.
- **Damodaran's semiconductor beta, a medium concern.** At 1.52 it is
  harsher than the peer median and not used; at 1.52 the value is $125 and
  the view is unchanged.
- **The outside view is 89% above the fade, a low concern, kept as a
  check.** Section 2 splits the gap between rates and the peer set.
- **The central fiscal 2029 is 13% below the Street on revenue and below
  management's fiscal 2029 targets, a medium concern,** with the dated
  reasons in the published report (2021 IoT miss; no accelerator or CPU
  silicon at customers, CEO 2026-07-29; handsets down 20% on memory, CFO
  2026-07-29).
- **Checked and clear:** the Amazon warrant and the 17.83M Modular shares
  are in the share count (8-K 2026-07-31 saved here); the bridge lines from
  enterprise value to equity are from the 10-Q for Q3 fiscal 2026 saved
  here.
- **Not raised:** the view is the blind view; the value is 23% below the
  price; the purchase price is $132 at peer beta and $131 at own beta; the
  value is 9% from the blind value.

## 7. Sources

As in the published report (section 12 there), plus: market data balance sheets for
fiscal 2016–25 for the mature return
(`data/balance-sheet-statement-annual.json`), an outside reviewer's rerun of
2026-10-15, and our valuation rules (valuation.md at d3f682a17).