QS Research · Michael Burry's Scion Capital analyst template · 2006
QUALCOMM INC/DE (QCOM)
As of 2026-11-08 · 11/15 boxes filled from SEC filings and market data
Conclusion: PASS
Conviction medium · base case -6% · downside -27% · upside +22%
Today's $165.41 capitalizes a data-center success that has produced no FY2026 revenue yet while the handset franchise rolls over (Q4 FY2026 handsets -26% to $5,137M), and the headline 13.0x P/E is struck on FY Sep 2026 net income of $13.63B that carries a $5.7B one-off tax benefit and exceeds pre-tax income of $9.41B. Normalized, which is what a cyclical deserves, FY2021-FY2026 average EBITDA is $12.44B versus $10.29B TTM, and 14x that figure after $6.93B net debt and $0.88B leases gives $155.4/share, 6.0% below the price, with 11x downside at $120.6 (-27.1%) and 18x upside at $201.9 (+22.1%). This is a wide-moat licence-and-chip business (FY2026 QTL revenue $5,556M at 72% EBT margin, renewed Apple/Huawei/Transsion deals) with real cyclicality - a ~16-point peak-to-trough operating margin swing - and its current wounds (memory/input-cost inflation, Apple's modem shift) are only partly temporary. The base case is negative and the downside case is worse than -25%, so the long rule fails; the base is nowhere near -30%, so the short rule fails too; with the price above my normalized base value there is no margin of safety and no edge. Pass.
Key numbers
- Share price: $165.41
- Market cap: $176.99B
- Latest financial period: FY Sep 2026 to Sep 27, 2026
- Revenue (FY Sep 2026): $43.12B
- EV / EBITDA (FY Sep 2026): 17.9x
- P/E (FY Sep 2026): 13.0x
The 15 boxes
- ✓ 1. Long-form business notes
QCOM makes money mainly by selling QCT integrated circuit platforms and system software and licensing QTL intellectual property, with QSI strategic investments and smaller nonreportable Data Center, QGOV and Modular businesses. The FY2021-FY2026 XBRL shows a clear cycle: FY2022 peak revenue was $44.20B with $15.86B operating income, FY2023 trough was $35.82B with $7.79B operating income, and FY2026 revenue was $43.12B but operating income only $8.66B. FY2026 net income of $13.63B is not a clean operating measure because it exceeds FY2026 pre-tax income of $9.41B and operating income of $8.66B in the XBRL table, and the source does not explain the gap. The business description has shifted from the FY2020 10-K’s wireless-industry framing to the FY2026 10-K’s AI and intelligent-computing-everywhere framing across handsets, automotive, IoT and data center.
- ○ 2. Competitive advantage
The sources show a wide-moat, licence-and-chip model that is nonetheless cyclical: operating income ran $15.86B on $44.20B revenue in FY2022, fell to $7.79B on $35.82B in FY2023, recovered to $12.36B in FY2025 and fell back to $8.66B in FY2026 (S27). The durable pieces visible in the filings are the QTL patent portfolio embedded in standards and licensed to hundreds of companies, a 40-year standards-setting record, and operating cash flow that stayed between $9.10B and $14.01B in every one of the six fiscal years shown. The vulnerabilities named in the filings are competition on price, integration and time-to-market, and revenue concentrated in a handful of handset customers and licensees including Apple, Samsung and Chinese OEMs. Net income is not usable as a profit measure here: FY2026 net income of $13.63B exceeds both pre-tax income of $9.41B and operating income of $8.66B, and the sources do not say why.
- ✓ 3. 10-Q takeaways
Q3 FY2026 (quarter ended 2026-06-28) revenue was $9.947 billion, down 4% year over year, with GAAP net income of $2.002 billion, down 25%, and GAAP diluted EPS of $1.87 versus non-GAAP $2.21. The weakness is concentrated in QCT handsets ($5.086 billion, -20%), partly offset by automotive (+61%) and IoT (+9%); gross margin fell to 53% from 56% on higher product cost. Margins and cash flow were also pressed by a $381 million R&D increase and an inventory build to $8.379 billion from $6.526 billion tied to memory supply constraints. Support to reported earnings came from non-operating items: $1.014 billion of investment and other income (IPO-driven gains on QSI investments), and a $5.7 billion tax benefit booked in Q2 FY2026, not this quarter.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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