Qualcomm's most profitable business, many people simply don't understand.

Today, we continue to discuss U.S. stock companies, focusing on the semiconductor series—Qualcomm (NASDAQ: QCOM). Headquartered in San Diego, USA, it is one of the core giants in global mobile communication chips and wireless communication patents.

Qualcomm's core business model is actually a "dual-engine" approach:

1. QCT (Chip Business): Qualcomm's CDMA technology, including chip design and sales, covering mobile phone chips (high-end phones currently all rely on Qualcomm chips like Snapdragon), automotive chips, AI chips, IoT, etc.

2. QTL (Patent Licensing Business): Patent licensing business, because Qualcomm is a rule-maker in the entire communication field, holding a large number of communication patents such as CDMA, 3G, 4G, 5G, etc. Therefore, any mobile phone manufacturer must pay licensing fees to Qualcomm; otherwise, they can't use 5G, and what phones would they sell? This part of the business can be said to have the lowest costs and highest gross margins for Qualcomm. It belongs to a toll booth model in the tech industry!

Currently, Qualcomm's main revenue still comes from QCT and QTL, with QCT accounting for over 80% of total revenue. In 2025, Qualcomm's annual revenue is projected to be $44.2 billion, with QCT revenue at $38.3 billion and QTL at $5.5 billion.

Qualcomm is currently undergoing a strategic transformation, not limited to mobile phones, but also shifting towards automotive electronics, AI, IoT, and PC series products.

As the automotive industry is fully electrifying, more chips are used in traditional vehicles, such as smart cabins, autonomous driving, vehicle networking, etc. By 2026, Qualcomm's automotive revenue will exceed $1.1 billion.

In AI, Qualcomm is betting on AI inference and edge AI, with specific deployment as follows:

It is also entering the PC market, challenging Intel and AMD, with its Snapdragon X Elite chips targeting PC AI.

Financial Data

Market cap is $256 billion, current stock price is $243, hitting a new all-time high, with a PE ratio of 25.

Looking at recent years' revenue, it has been relatively stable, roughly $30-40 billion from 2021 to 2025. Net income in 2022 was $12.9 billion, the highest in the past five years, while in 2025, net income is projected at $5.5 billion, the lowest in five years.

The recent stock price surge is mainly due to the explosive net income reported in Q2 2026, with Q2 revenue at $10 billion and net income at $6 billion. I checked Qualcomm's 2026 revenue estimate, which is about $42 billion, similar to the 2025 forecast. If subsequent receivables and estimates for 2026 are similar, then this stock price might struggle to rise much further.

In this wave of AI, Qualcomm's competitiveness is actually insufficient; it can't compete with NVIDIA, and only barely with Intel, AMD, and Apple.

As for its traditional mobile business, since it only serves Android phones, this segment is also being encroached upon by MediaTek, Samsung, etc. Moreover, the mobile field is already mature with no significant growth points. Of course, this segment still generates substantial income, serving as Qualcomm's "cash cow."

Therefore, future prospects depend on how much market share Qualcomm can capture in automotive and AI fields. Also, how many patents it can secure from its ongoing 6G research to continue dominating the QTL business.

In conclusion, Qualcomm's traditional business remains stable, and its current stock price and PE ratio are in line with expectations. However, its new businesses have not yet been proven to deliver significant value. To achieve higher valuation, we haven't seen clear signs yet. The stock has recently hit a new high, so it's not recommended to rush in unless future business performance is excellent enough to push its PE to around 20. Since in 2022, its PE was only 10, and in 2021 and 2023 it was in the teens, which is probably undervalued. Such companies should only be bought when they are clearly undervalued.