Qualcomm (QCOM) stock traded at about $183 on Monday morning, October 5, down 0.8% at 11:09 a.m. EDT, after Qualcomm and Huawei announced a multiyear patent license deal covering 5G, compute, AI, and networking. Qualcomm will also buy certain Huawei US patents, subject to regulatory approvals.
It’s a licensing-heavy Monday. The same day, Qualcomm heads to trial against Arm in Delaware, seeking to stop paying Arm royalties for up to five years.
What Qualcomm gets from Huawei
This is the first Huawei-Qualcomm license to include 5G, Reuters reported. Neither company disclosed financial terms or which side pays. Qualcomm EVP John Han said the deal “reaffirms industry recognition of Qualcomm’s 5G technology leadership and the success of Qualcomm’s 5G SEP licensing program.”
The timing matters because licensing has been soft. Qualcomm’s QTL licensing segment brought in $1.28 billion in the June quarter, the lowest of the last eight quarters and down from $1.32 billion a year earlier. It’s also Qualcomm’s richest business, running a 69% EBT margin last quarter.
QCOM valuation model: margin comes down, growth holds
I ran a mid case with revenue growing 10.1% a year, a net income margin of 26.5%, EPS growth of 14.0% a year, and the P/E edging up 0.9% a year. That’s slower than last year’s 13.3% revenue growth, and the margin sits below last year’s 29.6%. I set it lower because CFO Akash Palkhiwala said on the Q3 2026 earnings call that custom data center chips will be “a drag of 1.5% to 2% on the weighted average gross margin for QCT.”
The model lands at $388 by September 30, 2030. That is a 109.7% total return from $184.87 over 4.0 years, or 20.4% a year. The stock roughly doubles.
For scale, Qualcomm is targeting $15 billion in data center revenue in fiscal 2029, about 2.6 times what QTL brought in over the last four quarters. Huawei sits on the high-margin side of the business. The data center ramp is what the model leans on, so watch the first custom-chip revenue Qualcomm expects in the December quarter.
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