QUALCOMM (QCOM) is in focus after securing a high profile deal to supply millions of custom ASIC chips to ByteDance for AI data centers. This move pushed the stock to record highs.

The ByteDance ASIC deal comes on top of a strong run in QUALCOMM’s share price, with a 30 day share price return of 62.19% and a year to date share price return of 40.65%, while the 1 year total shareholder return of 67.85% and 3 year total shareholder return of 123.35% point to momentum that investors are now tying more directly to data center and automotive developments rather than just smartphones.

If QUALCOMM’s AI push has your attention, it could be a good moment to look across the sector and scan 47 AI infrastructure stocks

With QUALCOMM now trading well above its stated analyst price target and intrinsic value estimate, the key question is simple: are you looking at an overheated AI story, or is the market only starting to price in future growth?

Most Popular Narrative: 18.9% Undervalued

Compared with QUALCOMM's last close of $243.29, the most followed narrative sets a fair value at $300, implying a meaningful valuation gap that investors are watching closely.

Qualcomm (QCOM) delivered a strong start to FY2025, posting record revenues of $11.7 billion (+18% YoY) and EPS growth of 24% YoY to $3.41. The company’s handset, automotive (+61% YoY), and IoT (+36% YoY) segments drove top-line expansion, while $2.7 billion was returned to shareholders through buybacks and dividends.

Want to understand why this narrative leans toward a higher fair value? It leans heavily on segment momentum, margin strength and a richer earnings multiple. Curious which assumptions matter most for that $300 figure? The full narrative lays out the playbook in detail.

Result: Fair Value of $300 (UNDERVALUED)

However, there are still clear risks, including QUALCOMM’s recent share price surge outpacing its analyst target and intrinsic estimate, and a decline in annual net income growth.

Another View: Our DCF Model Points The Other Way

That $300 fair value comes from a narrative that leans on growth and margins, but our DCF model tells a different story. On that approach, QUALCOMM’s last close of $243.29 sits above an estimated future cash flow value of $156.13, which implies the stock screens as overvalued on cash flows.

For investors who like to stress test upbeat narratives against hard cash flow math, this kind of gap can be a useful reality check, even if it is not the final word. It raises a simple question: are market expectations running ahead of what the business is currently projected to earn, or are the cash flow assumptions too conservative?

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 46 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

If this mix of optimism and concern feels familiar, that is the point. You should move quickly, review the data, and weigh the 3 key rewards and 2 important warning signs.

Ready for more investment ideas?

If QUALCOMM has sharpened your focus on where to put capital next, do not stop here. Widening your search now could be the edge others miss.

• Target stability and income by reviewing companies that stand out as 10 dividend fortresses for investors who care about regular cash returns.
• Hunt for potential mispricings by scanning 46 high quality undervalued stocks that combine quality metrics with what may be appealing entry points.
• Prioritize resilience by filtering 64 resilient stocks with low risk scores that score well on balance sheet strength and business risk factors.

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.