With Strong Cash Flow, Qualcomm Stock Poised to Rise?

Qualcomm (QCOM) could be a good pick for your portfolio, with its high cash yield, good fundamentals, and discounted valuation. Companies like this can use cash to fuel additional revenue growth or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market

What Is Happening With QCOM

QCOM stock is currently trading at P/S (Price-to-Sales) ratio that is at a meaningful discount to its 3-month and 2-year highs and also below its 3-year average.

The stock may not reflect it yet, but here is what’s going well for the company. Q4 FY25 showed record automotive revenues, up 17% due to Snapdragon Digital Chassis deployments in new vehicles. IoT revenues grew 7%, boosted by Snapdragon AR1 in smart glasses and the Arduino acquisition for edge AI solutions. At CES 2026, new Snapdragon platforms showcased advancements in on-device AI for PCs and mobile. Collaboration with HP is also advancing AI-on-Device PCs. The Q1 FY26 revenue guidance is $11.8-$12.6 billion, signaling continued demand.

QCOM Has Good Fundamentals

• Good Cash Yield: Not many stocks offer free cash flow yield of 8.1%, but Qualcomm stock does
• Strong Margin: Last 12-month operating margin of 28.0%
• Growth: Last 12 months’ revenue growth of 13.7%—low growth, but this selection is all about high yield and margin
• Valuation: QCOM stock is currently trading at 33% below the 2-year high, 19% below the 1-month high, and at a PS lower than the 3-year average.

Below is a quick comparison of QCOM fundamentals with S&P medians.

*LTM: Last Twelve Months

But What Is The Risk Involved?

While QCOM stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. QCOM plunged nearly 79% in the Dot-Com Bubble, took a hit of 48% during the Global Financial Crisis, and dropped about 44% in the recent inflation shock. Even the less severe events — like the 2018 Correction and the Covid selloff — dragged the stock down over 33% and 36%, respectively. Strong fundamentals matter, but sharp market selloffs still push down even solid names hard. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read QCOM Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

For more details and our view, see Buy or Sell QCOM Stock.

Stocks Like QCOM

Not ready to act on QCOM? Consider these alternatives:

1. Accenture (ACN)
2. Paychex (PAYX)
3. GLOBALFOUNDRIES (GFS)

We chose these stocks using the following criteria:

1. Greater than $2 billion in market cap
2. Dipped last month & meaningfully below 2Y high
3. Current P/S < last few years average
4. Strong operating margin with no instances of large margin collapse
5. High free cash flow yield

A portfolio of stocks with the criteria above would have performed as follows since 12/31/2016:

• Average 6-month and 12-month forward returns of 10.4% and 20.4%, respectively
• Win rate (percentage of picks returning positive) of about 74% for 12-month period
• Strategy consistent across market cycles

Stock Picking Falls Short Against Multi-Asset Portfolios

Markets move differently, but a mix of assets smooths volatility. A multi-asset portfolio keeps you invested and reduces the impact of sharp drops in any single area.

The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices