QUALCOMM IncorporatedQCOMNASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $208.74 per share(market-calibrated)

+48.0%

Upside to Fair Value

Current

$141.03

Pure Model

$208.87

Fair Value

$208.74

Bull Case

$255.73

Bear Case

$165.61

Market Reality Check

Model Terminal Growth

3.75%

Market-Implied Growth

3.69%

Calibrated Growth

3.73%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $208.87.

What's Driving This Ratingfor QCOM

✓

CapEx already efficient

CapEx at 3.54% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

✓

Premium margins already priced in

EBIT margin of 29.07% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects -0.95% revenue growth, fading to 3.75% by Year 10. Revenue reaches $64.9B (vs $44.3B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $142.07/share (18.5x terminal FCF) while exit multiple gives $275.67/share (46.1x terminal FCF). The 28x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.75% growth is more conservative. The base case averages both methods.

✓

Model and market roughly agree

Market-implied terminal growth of 3.69% is close to the model's 3.75% (only 6bps apart). The DCF assumptions are well-aligned with how the market is pricing this stock.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 60.71% indicates efficient cash generation. FCF reaches $13.0B by Year 10 (19.96% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.24

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)10.07%

Cost of Debt

Pre-tax Cost of Debt3.79%

Tax Rate30.00%

After-tax Cost of Debt2.65%

Equity Weight (E/V)90.42%

Debt Weight (D/V)9.58%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (90.42% × 10.07%) + (9.58% × 2.65%)

= 9.36%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$43.9B	$47.1B	$54.0B	$58.2B	$64.9B
EBIT	$12.7B	$13.7B	$15.7B	$16.9B	$18.9B
Tax	$3.8B	$4.1B	$4.7B	$5.1B	$5.7B
NOPAT	$8.9B	$9.6B	$11.0B	$11.8B	$13.2B
+ Depreciation	$1.7B	$1.8B	$2.1B	$2.2B	$2.5B
- Capex	$1.6B	$1.7B	$1.9B	$2.1B	$2.3B
- Δ NWC	-$77M	$540M	$359M	$387M	$432M
Free Cash Flow	$9.1B	$9.2B	$10.8B	$11.6B	$13.0B
Discount Factor	0.914	0.765	0.639	0.535	0.409
Present Value	$8.3B	$7.0B	$6.9B	$6.2B	$5.3B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$13.0B

Terminal Growth Rate3.75%

WACC9.36%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$239.8B

PV of Terminal Value$98.0B

Exit Multiple Method

Year 10 EBITDA$21.4B

Exit Multiple (EV/EBITDA)28.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$598.1B

PV of Terminal Value$244.4B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$66.2B

PV of Terminal Value$98.0B

Enterprise Value$164.2B

(-) Net Debt$8.5B

Equity Value$155.7B

Shares Outstanding1.1B

Price per Share$142.07

Exit Multiple Method

PV of Projected FCFs$66.2B

PV of Terminal Value$244.4B

Enterprise Value$310.7B

(-) Net Debt$8.5B

Equity Value$302.1B

Shares Outstanding1.1B

Price per Share$275.67

Pure Model Fair Value

$208.87

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.75%	3.25%	3.75%	4.25%	4.75%
7.36%	$257.66	$265.90	$276.41	$290.31	$309.53
8.36%	$226.36	$231.37	$237.47	$245.04	$254.72
9.36%	$201.74	$205.01	$208.87	$213.48	$219.09
10.36%	$181.53	$183.78	$186.37	$189.38	$192.94
11.36%	$164.46	$166.07	$167.89	$169.96	$172.35

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$165.61

17.4% vs current

• -25% vs analyst consensus
• Terminal growth: 3.3%
• Beta: 1.55

Base Case

$208.87

48.1% vs current

• Analyst consensus
• Terminal growth: 3.8%
• Beta: 1.24

Bull Case

$255.73

81.3% vs current

• +25% vs analyst consensus
• Terminal growth: 4.3%
• Beta: 1.05

Key Assumptions & Drivers• Technology Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-0.95%

Year 3 Revenue Growth6.64%

Year 5 Revenue Growth3.75%

Year 7 Revenue Growth3.75%

Year 10 Revenue Growth3.75%

Terminal Growth Rate3.75%

Margin & Efficiency

Current EBIT Margin29.07%

Tax Rate30.00%

Historical Capex / Rev3.54%

NWC / Revenue18.40%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 28x EV/EBITDA (Technology sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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