Could Qualcomm Be The Value Stock For Your Portfolio?

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Qualcomm (QCOM) shares trade at 20.9 times earnings, against 22.5 for the median S&P 500 company. The stock lost 0.5% over the past year, while the S&P 500 returned 14.0%. That looks like a profitable chip maker on sale, provided its chip margins recover from high memory prices and its car and data center chips make up for weaker phone sales. So what are you getting for that price today?

What Qualcomm Stock Gives You Today

You get a chip maker that keeps more of each sales dollar than a typical large company and returns much of its cash to owners. Qualcomm’s operating margin was 23.3% over the twelve months ended June 28, 2026, against 18.5% for the median S&P 500 company. The chip business, home to the Snapdragon line, accounted for $38.4 billion of the company’s $44.3 billion revenue in fiscal 2025.

During that same twelve-month stretch, Qualcomm generated $10.4 billion in free cash flow, representing a 5.4% yield on its market value. The company returns 4.8% of that market value a year through stock buybacks and pays a 2.0% dividend yield. Combined, those payouts exceed the free cash flow it generated.

Has Qualcomm’s Profit Margin Held Up?

Not so far. The company’s twelve-month operating margin sits below the 25.6% it averaged across the three twelve-month periods ended June 2024, 2025 and 2026. Revenue grew 1.9% over the latest twelve months, trailing the 4.8% average growth rate over those same three periods.

The latest quarter proved even weaker. Revenue for fiscal Q3 2026 fell 4.0% from a year earlier, and the operating margin dropped to 16.3% from 26.6% the year before.

During the July 29, 2026 call, management said unprecedented memory prices are shrinking the smartphone market and putting short-term pressure on its chip margins. Management also expected the decline in sales to Apple to speed up starting in the fourth fiscal quarter. Management said Qualcomm’s share of the iPhone launch would be materially lower than its earlier estimate of 20%.

How Is Qualcomm Making Up For Weaker Phone Sales?

The company has relied mostly on car chips so far, though not yet by enough to stop total revenue from falling. Automotive revenue reached $1.6 billion in fiscal Q3 2026, climbing 61% from a year earlier.

Data center chips are next in line. Management said its first two custom chip wins will generate revenue in the December quarter, and it expects data center revenue to reach $5 billion in fiscal 2027. Management’s wider target is $40 billion of revenue outside phones by fiscal 2029, up from an earlier target of $22 billion.

On margins, Qualcomm is raising prices by double digits. Management expects this benefit to appear in gross margins over the next couple of quarters, and it also expects data center chips to lower its chip gross margin by 1.5% to 2%.

What Would A Qualcomm Buyer Be Betting On?

A buyer is betting that Qualcomm’s price increases will restore its chip margins, and that car and data center sales will grow enough to replace weaker phone sales. The discount comes on a smaller profit than a year ago: Qualcomm’s net income was $9.26 billion over the twelve months ended June 2026, down from $11.6 billion a year earlier.

As an owner, you would collect Qualcomm’s dividend while you wait for its profit to recover. Car chip sales are growing fast, data center sales are due to start in the December quarter, and the margin has not yet turned. Qualcomm’s quarterly operating margin is the number to watch when the company reports its fiscal Q4 2026 results, expected in November 2026.

Does This Mean You Should Act On QCOM?

Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.

There is a smarter approach. Since its inception, the Trefis High Quality (HQ) Portfolio has returned 105%, beating the benchmark that combines the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000. And it did so without taking the concentrated risk that comes with do-it-yourself stock picking. If that is how you want to invest, the HQ Portfolio is the place to start.

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