A Look At The Fair Value Of QUALCOMM Incorporated (NASDAQ:QCOM)

Simply Wall St

Mon, February 16, 2026 at 11:00 PM GMT+9 6 min read

In this article:

QCOM

+1.61%

Key Insights

QUALCOMM's estimated fair value is US$155 based on 2 Stage Free Cash Flow to Equity

With US$141 share price, QUALCOMM appears to be trading close to its estimated fair value

Our fair value estimate is 3.3% lower than QUALCOMM's analyst price target of US$160

How far off is QUALCOMM Incorporated (NASDAQ:QCOM) from its intrinsic value? Using the most recent financial data, we’ll take a look at whether the stock is fairly priced by taking the expected future cash flows and discounting them to their present value. We will take advantage of the Discounted Cash Flow (DCF) model for this purpose. There’s really not all that much to it, even though it might appear quite complex.

We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model.

We’ve found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

What’s The Estimated Valuation?

We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company’s cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren’t available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.

Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today’s value:

10-year free cash flow (FCF) estimate

(“Est” = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = US$82b

Story Continues  

The second stage is also known as Terminal Value, this is the business’s cash flow after the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country’s GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (3.4%) to estimate future growth. In the same way as with the 10-year ‘growth’ period, we discount future cash flows to today’s value, using a cost of equity of 11%.

Terminal Value (TV)$1 FCF2035 × (1 + g) ÷ (r – g) = US$17b× (1 + 3.4%) ÷ (11%– 3.4%) = US$233b

Present Value of Terminal Value (PVTV)$1 TV / (1 + r)10$1 US$233b÷ ( 1 + 11%)10$1 US$84b

The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$165b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Compared to the current share price of US$141, the company appears about fair value at a 9.2% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent.

NasdaqGS:QCOM Discounted Cash Flow February 16th 2026

The Assumptions

Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. You don’t have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company’s future capital requirements, so it does not give a full picture of a company’s potential performance. Given that we are looking at QUALCOMM as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we’ve used 11%, which is based on a levered beta of 1.659. Beta is a measure of a stock’s volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.

See our latest analysis for QUALCOMM

SWOT Analysis for QUALCOMM

Strength

Debt is not viewed as a risk.

Dividends are covered by earnings and cash flows.

Weakness

Earnings declined over the past year.

Dividend is low compared to the top 25% of dividend payers in the Semiconductor market.

Opportunity

Annual earnings are forecast to grow faster than the American market.

Good value based on P/E ratio and estimated fair value.

Threat

Annual revenue is forecast to grow slower than the American market.

Moving On:

Whilst important, the DCF calculation ideally won’t be the sole piece of analysis you scrutinize for a company. The DCF model is not a perfect stock valuation tool. Preferably you’d apply different cases and assumptions and see how they would impact the company’s valuation. If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. For QUALCOMM, we’ve put together three pertinent aspects you should explore:

**Risks**: For example, we've discovered **1 warning sign for QUALCOMM** that you should be aware of before investing here.

**Future Earnings**: How does QCOM's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.

**Other Solid Businesses**: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered!

PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here.

Have feedback on this article? Concerned about the content? Get in touch** with us directly.**_ Alternatively, email editorial-team (at) simplywallst.com._

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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