Is QUALCOMM (QCOM) Undervalued After Landing Its First Hyperscaler Data Center Chip Orders?

QUALCOMM (QCOM) has moved production of its new data center chips from plan to reality, securing initial orders from two global hyperscalers as it works to reduce dependence on smartphones and broaden its AI and automotive footprint.

The recent move into data center chips follows a mixed stretch for QUALCOMM’s stock. The share price is up 1.7% year to date and the 1-year total shareholder return is 6.3%. However, the 30-day share price return is down 10.8%, while the 3-year total shareholder return is around 76%.

Scan how QUALCOMM’s pivot into data center and AI compares with peers by running the hand-picked 55 AI infrastructure stocks that are building the backbone for hyperscalers.

QUALCOMM has fresh momentum from hyperscaler data center wins, yet a 3 year total return near 76% suggests a lot has already been priced in. How much of the potential is still on the table at today’s valuation?

Most Popular Narrative: 9% Undervalued

At a last close of $175.91 against a widely followed fair value estimate of $194.13, QUALCOMM is framed as modestly undervalued, with that gap hinging on how well the non handset and data center plans translate into durable earnings.

Execution against Qualcomm’s fiscal 2029 target of $40b in non handset QCT revenue, including more than $14b from IoT and $10b from automotive, together with long term operating margin goals of about 30% for QCT and 70% for QTL, would support a shift in the company’s earnings profile away from handset cyclicality and toward a broader AI and compute revenue base.

See why 636 investors see QUALCOMM as 9% undervalued.

Result: Fair Value of $194.13 (UNDERVALUED)

Still, the QUALCOMM story can be knocked off course if smartphone demand stays soft for longer or if its big AI and data center bets underdeliver.

Find out about the key risks to this QUALCOMM narrative.

Another View: QUALCOMM Looks Full on Cash Flows

There is a twist when switching from fair value estimates based on earnings to the Simply Wall St DCF model. On that cash flow view, QUALCOMM at $175.91 trades slightly above an estimated value of $172.32, so the stock screens as a touch overvalued rather than cheap. Which lens do you trust more when cash flows and multiples disagree?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out QUALCOMM for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 27 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Mixed signals around QUALCOMM’s valuation and growth story mean opinions are likely to stay split. Act while sentiment is still forming by running the numbers yourself, comparing both the upside and the pressure points, and weighing the 3 key rewards and 1 important warning sign.

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