Qualcomm is a designer of mobile and networking semiconductors and licensor of communications technologies, operating as a high‑margin, cash‑generative technology company with a conservative balance sheet.
The company shows clear strengths in margin and cash generation: gross margin remains elevated at about 55.1% and operating margin near 47.9%, while free cash flow margin is roughly 28.8% and trailing twelve‑month operating cash flow was $14.39B, supporting strong cash conversion. Top‑line per‑share metrics have also been healthy — five‑year revenue‑per‑share CAGR was about 10.95% and five‑year book‑value‑per‑share compounded at roughly 25.61%, with revenue per share still growing about 10.2% year‑over‑year — and liquidity/leverage metrics are conservative (current ratio ~2.82, net debt effectively 0.0 and interest coverage ~18.2x).
Areas of concern center on recent earnings volatility and margin compression at the net level. Diluted EPS plunged about 49.2% year‑over‑year to $4.89, and trailing twelve‑month net income fell sharply from $11.58B to $5.37B while operating cash flow rose, producing a roughly $9.02B divergence between OCF ($14.39B) and net income ($5.37B). Net profit margin has consequently dropped to about 12.0% from mid‑20s earlier in the year, and return on equity has eased to roughly 23.3% from mid‑40s in recent quarters.
The foundation of business quality and long-term value creation
Over the multi-year series, QUALCOMM INC/DE’s revenue shows a clear upward trajectory with seasonal and quarterly variability. Revenue has risen from the mid-single-digit billions in 2019–2020 to a run rate around $10–12B in recent years, with sequential growth in the last three reported quarters: $10.37B (2025-06), $11.27B (2025-09), and $12.25B (2025-12), representing the highest revenue in the dataset.
Net income has been more volatile than revenue, generally clustering in the $1.5–3.5B range for many quarters but exhibiting large swings in 2025. After $2.67B in 2025-06, net income swung to a -3.12B loss in 2025-09 and then recovered to $3.00B in 2025-12. The most recent revenue was $12.25B and the most recent net income was $3.00B.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Dec 2024 to Dec 2025, Qualcomm Incde converts approximately 55¢ of every revenue dollar into gross profit (gross margin: 55.1%).After accounting for operating expenses and taxes and expenses, the company retains 12.0% as net profit margin, resulting in $5.37B in net earnings.
Period Information
Report Type: Annual (10-K)
Period: Dec 2024 to Dec 2025
Revenue composition by disclosure category for the latest period
The provided excerpt does not contain explicit details about the company’s revenue sources, including specific products, services, or end markets. It only includes table-of-contents material and boilerplate language regarding forward-looking statements and definitions.
There is no information available about customer types, profiles, or segments within the provided excerpt.
The excerpt does not disclose any data about geographic sales, markets, or regional revenue breakdowns.
Details about distribution or sales channels are not included in the supplied content.
Information regarding the nature of revenue—whether recurring or transactional—is not provided in the excerpt.
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Analyzing long-term margin stability and competitive positioning
QUALCOMM INC/DE's profit margins show relative stability in gross and operating margins with a pronounced recent deterioration in net margin. Over the last several quarters, gross margin has edged down modestly from mid-55% levels (55.7% in 2025-06 and 55.4% in 2025-09) to 55.1% in 2025-12, and operating margin has similarly drifted from the high-48% range (48.8% in 2025-06, 48.4% in 2025-09) to 47.9% in 2025-12. By contrast, net profit margin exhibits a clear inflection: it was about mid-20s earlier in 2025 (26.1% in 2025-03, 26.8% in 2025-06) before dropping sharply to 12.5% in 2025-09 and to 12.0% in 2025-12.
Viewed over a longer horizon, gross margin has declined from around 60.0% in 2021-03 to the mid-55% range today, and operating margin has moved from the low-50% range in 2021–2022 to just under 50% more recently. The most recent gross margin was 55.1%, the operating margin was 47.9%, and the net profit margin was 12.0%.
Understanding Profit Margins
Between Dec 2024 and Dec 2025, Qualcomm Incde converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Over the last several reported quarters QUALCOMM INC/DE shows a widening divergence between trailing twelve‑month operating cash flow and net income. Operating cash flow TTM has moved up from $12.66B at 2025-06-29 to $14.39B at 2025-12-28, while net income TTM fell sharply from $11.58B at 2025-06-29 to $5.37B at 2025-12-28. The most recent quarter therefore shows operating cash flow exceeding net income by approximately $9.02B, reflecting a notable gap in the latest TTM figures.
In a longer view there are earlier inflection points: mid‑2022 (e.g., 2022-09-25) where net income exceeded operating cash flow ($12.94B vs $9.10B), and a period from 2023 onward where operating cash flow generally tracked at or above net income until the current pronounced divergence. The most recent Net Income (TTM) was $5.37B and the most recent Operating Cash Flow (TTM) was $14.39B.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
QUALCOMM INC/DE's ROE was elevated through 2023–mid‑2025, staying in the mid‑30s to low‑40s percent range (35.3% in 2024‑06, 38.6% in 2024‑09, 39.3% in 2024‑12, 39.8% in 2025‑03, and 42.6% in 2025‑06).
There is a clear inflection in the most recent quarters: ROE fell sharply to 26.1% in 2025‑09 and declined further to 23.3% in 2025‑12, representing a notable downward move from the mid‑year peak.
Over the full history shown, ROE moved from a stable 15–20% band in 2010–2016 into more volatile and substantially higher levels from 2019 through 2023 (including a peak of 132.9% in 2020‑03). The series also contains an extreme negative outlier of −524.1% in 2018‑09. The most recent quarterly ROE (period ending 2025‑12‑28) was 23.3%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
QUALCOMM INC/DE’s trailing twelve-month operating cash flow has trended upward over the past year, rising from $12.66B in June 2025 to $14.01B in September 2025 and reaching $14.39B in the most recent period, reflecting stronger cash generation from core operations in the latest quarters.
Financing cash flows show a clear and steady increase in net outflows over the same interval: financing outflows were -$11.44B in March 2025, -$11.96B in June, -$13.20B in September and -$14.07B in the latest TTM, indicating growing use of cash in financing activities relative to earlier years.
Investing cash flows have been more variable: a larger negative swing occurred in March 2025 (-$3.39B), then investing outflows eased to -$714M in June and -$800M in September before moving back toward a larger outflow of -$1.85B in the most recent TTM.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
QUALCOMM INC/DE's PE ratio was relatively stable in the mid-teens through the first half of 2025, recording 15.3x on 2025-03-30 and 15.1x on 2025-06-29. It then experienced a sharp re-rating in the most recent two quarters, rising to 32.8x on 2025-09-28 and 35.5x on 2025-12-28. This jump between 2025-06-29 and 2025-09-28 marks a clear inflection point in the series, with the elevated level maintained into the latest quarter.
Over a longer horizon, the PE climbed from low double-digits in 2021–2022 (around 10.2x) into the high teens and mid-20s through 2023–2024 (peaking at 25.3x on 2024-06-23), then dipped back to the mid-teens in early 2025 before the recent spike. The most recent Price-to-Earnings ratio was 35.5x.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.