NASDAQ QCOM and Its Role in 5G Technology

Founded in 1985, QUALCOMM Incorporated (NASDAQ: QCOM) is a U.S.–based semiconductor and wireless-communications company headquartered in San Diego, California.

Segment overview

QUALCOMM has historically operated through three primary segments:

QCT (QUALCOMM CDMA Technologies) – the semiconductor chip business (mobile phones, tablets, IoT devices, automotive systems).
QTL (QUALCOMM Technology Licensing) – the licensing business for patents and technologies (wireless standards, modems, etc.).
QSI (QUALCOMM Strategic Initiatives) – smaller investments and future-oriented businesses.

Why it matters

QUALCOMM’s unique mix of licensing + fabless semiconductor design gives it a structural advantage: recurring royalty streams from standards-essential patents (SEP) and growth potential from next-generation chips (5G/6G, AI, automotive, IoT). This business-model combination sets QCOM apart from many pure-chip peers.

Evolution of the business

Originally known for its CDMA wireless patent royalties and mobile phone baseband chips, QUALCOMM has increasingly diversified into automotive, IoT (internet-of-things), and on-device artificial intelligence (AI). For example, the company states that it “helps transform industries, create new experiences” via its innovations.

Q3 FY2025 results

In its fiscal third quarter ended June 29, 2025, QUALCOMM reported revenue of about US$10.4 billion, a ~10% year-over-year increase. Net income rose to roughly US$2.66 billion.

The earnings beat analyst estimates and highlighted strong growth in the Automotive and IoT segments.

Q4 and FY2025 outlook

For Q4/FY2025, analysts expect continued diversification away from smartphone concentration, especially Apple, and increased momentum in data centre/AI and automotive.

Segment trends

Automotive & IoT: These are showing double-digit growth — for example, Automotive +17% in recent commentary.
Smartphones/mobile chips (QCT): While still large, this segment faces margin and competitive pressures, particularly as key customers shift strategy.
Licensing (QTL): Historically high margin, but vulnerable to litigation, regulatory scrutiny, and customer transitions.

Summary of key metrics

Revenue growth around ~10% in recent quarter.
Shift from pure mobile/chip business toward broader markets.
Diversification reducing risk of single-customer concentration (e.g., Apple).

Growth Drivers & Strategic Initiatives

AI & Data Centre Expansion

One of the biggest strategic pivots for QUALCOMM is entering the AI/data-centre market. Analysts highlight that the company may be “the least expensive AI stock as data-centre hopes rise”.The acquisition of UK-based Alphawave IP Group PLC (deal value ~$2.4 billion) is a clear signal of this ambition; Alphawave’s high-speed wired connectivity and chiplet technologies are critical for AI/data-centre workloads.

Automotive & IoT Diversification

Automation, connected vehicles, wearables, XR (extended reality) devices — these are all markets where QUALCOMM sees growth. For instance:

Automotive +17% growth in recent commentary.
IoT showing mid-single-digit to double-digit growth.
Partnerships in XR/smart glasses (e.g., with Meta Platforms, Inc.) and upcoming Android XR devices.

Premium Android Smartphone Leadership

While the company anticipates some decline in Apple‐derived revenues, its dominance in premium Android devices remains strong. For example, the Snapdragon platform in Samsung’s Galaxy S25 and anticipated large share in Galaxy S26.

Licensing and Standards Leadership

QUALCOMM continues to benefit from its portfolio of wireless standards-essential patents (5G/4G/CDMA) which generate recurring royalty streams. The company’s licensing model remains a structural advantage although regulatory and customer risks exist.

Conversion From “Value” to “Growth”

Some analysts believe QCOM is trading at a discount relative to its growth potential (especially in AI/automotive) and could see a re-rating.

Market Position, Competitive Landscape & Moat

Competitive advantages

Patent/IP moat: QUALCOMM’s licensing business gives it a durable revenue stream that many chip companies lack.
Broad ecosystem: It spans mobile chips, licensing, IoT, automotive — reducing reliance on any single market.
Fabless model: Keeps capital intensity lower and allows focus on design/innovation.
Strong relationships: Key partnerships with major OEMs (smartphones, automakers) and platform builders.

Competitive threats

Competitors in the chip space (e.g., NVIDIA Corporation, Advanced Micro Devices, Inc. (AMD), MediaTek Inc.) are aggressively targeting mobile/AI markets.
Licensing dynamics are shifting: for example, Apple bringing modems in-house in the future or shifting away from third-party reliance.
Regulatory and antitrust risk: Because QUALCOMM’s business touches wireless standards and global supply chains, it’s sensitive to regulatory scrutiny.

Summary

Overall, QUALCOMM is well-positioned at the intersection of mobile, automotive, IoT and AI ecosystems. Its transition from being heavily smartphone dependent to a more diversified growth engine is a positive structural shift. The moat remains intact but faces more dynamic competition and regulatory headwinds.

Current valuation context

As noted by analysts, QUALCOMM is currently trading at a forward non-GAAP P/E of around 14× to 15×, which is relatively modest given the growth drivers.

Key valuation considerations

If QCOM can deliver double-digit growth in high-margin automotive/AI/IoT segments, the modest valuation could imply significant upside.
On the flip side, if smartphone demand weakens severely, licensing business falters, or margin erosion begins, the valuation could be justified or even optimistic.

Peer comparison

Compared to pure-play AI or data-centre companies, QCOM’s valuation is conservative. That may reflect investor caution, but also suggests room for re-rating if growth manifests as expected.

Scenario outlook

Base case: Moderate growth (~8-10%), valuation expands to ~16× P/E → modest upside.
Bull case: Strong growth (>15%) in automotive/AI, valuation multiple expands to ~20× → significant upside.
Bear case: Smartphone weakness + licensing headwinds → growth stalls, valuation multiple compresses → downside risk.

Key Risks & What Could Go Wrong

Though QUALCOMM is strong in premium Android, the smartphone market as a whole is maturing. If major OEMs shift to in-house modems or alternative architectures, QCT revenue could suffer.

Licensing & regulatory risk

Its licensing business (QTL) is exposed to antitrust scrutiny, patent disputes, and changing royalty regimes. For example, QTL revenue came in slightly below expectations in earlier periods and weighed on investor sentiment.

Intense competition in chips & AI

Moving into AI/data‐centre and automotive means going up against entrenched players (e.g., NVIDIA for AI, Intel/AMD/others for data-centre). Execution risk is non-trivial.

Macroeconomic / trade / supply-chain risks

Semiconductor and related markets are cyclical. Geopolitical tensions (e.g., US-China trade), chip supply constraints or demand cycles may impact QCOM’s business.

Execution risk on new markets

Diversification is underway, but the growth from automotive/IoT/AI still needs to scale meaningfully to offset any smartphone weakness. If this doesn’t happen, investor expectations may not be met.

Analyst Sentiment & Price Outlook

Analysts from firms like JPMorgan Chase & Co. have reiterated an Overweight rating on QCOM, citing diversification and AI/data-centre opportunities.
The market appears to be cautiously optimistic, focusing heavily on the guidance and forward‐looking commentary, rather than just the quarterly beat.
Many analysts note that the guidance is as critical (or more critical) than the actual beat.

Price target perspective

While exact price targets vary, the narrative suggests that if QCOM executes on its growth strategy, there is meaningful upside from current levels — especially given its modest valuation. Investors should watch the next few quarters for signal events.

Conclusion – Is QCOM a Buy Today?

After reviewing QUALCOMM’s business model, financial performance, growth drivers, valuation and risks, here’s my view:

Strengths: Strong IP/licensing business, growing diversification into secular growth sectors (automotive, IoT, AI/data centre), modest valuation.
Weaknesses / risk factors: Execution risk in new markets, smartphone segment maturity, regulatory/licensing exposure.
My verdict: QUALCOMM represents a compelling long-term investment if you believe in the structural shift toward AI, automotive and IoT and are comfortable giving the strategy time to play out. The risk/reward appears favorable relative to many peers.

If I were to rank it: Buy (with a time horizon of 3-5 years), conditional on management executing and the macro environment being favorable.

FAQ Section

Q1: When does QUALCOMM report next earnings?
According to the company’s investor-relations site, the next earnings call is scheduled following the FY 2025 Q4 release.

Q2: How much of QUALCOMM’s revenue comes from Apple?
Historically a significant portion, but QUALCOMM is actively diversifying away from Apple concentration. Analysts expect non-Apple QCT revenues to grow strongly.

Q3: What is the dividend?
While this article focuses primarily on growth, QCOM does pay a dividend, but investors should view the company more as a growth vehicle than a high-yield play.

Q4: How will the data-centre strategy impact the business?
The move into data centres (e.g., via Alphawave acquisition) is aimed at unlocking a new high-growth, high-margin vertical. If successful, this could materially change the company’s growth profile.

Q5: What multiple is the stock trading at?
Roughly ~14–15× forward non-GAAP P/E currently, which is modest relative to many growth peers.