In the ever-evolving semiconductor industry, two key players stand out: QUALCOMM Incorporated (QCOM) and Arm Holdings plc (ARM). Both companies are at the forefront of innovation, yet they approach the market with distinct strategies and technologies. QUALCOMM specializes in wireless communications and integrated circuits, while Arm focuses on licensing CPU architectures for a wide range of applications. In this article, I will analyze these companies to help you determine which one offers the most compelling investment opportunity.
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Company Overview
QUALCOMM Overview
QUALCOMM Incorporated is a leading technology company specializing in the development and commercialization of foundational technologies for the wireless industry. Founded in 1985 and headquartered in San Diego, California, the company operates with a market capitalization of approximately $180B. QUALCOMM’s operations are divided into three primary segments: Qualcomm CDMA Technologies (QCT), which focuses on integrated circuits and system software for wireless communications; Qualcomm Technology Licensing (QTL), which manages the licensing of its extensive patent portfolio; and Qualcomm Strategic Initiatives (QSI), which invests in early-stage companies across various tech sectors. The company is well-positioned in the semiconductor market, particularly in the booming 5G sector, with a strong commitment to innovation and strategic investments.
Arm Holdings Overview
Arm Holdings plc, headquartered in Cambridge, UK, is a prominent player in the semiconductor industry, specializing in the design and licensing of central processing unit (CPU) products. Established in 1990, Arm has a market capitalization of around $143B. The company’s focus is on providing semiconductor companies and original equipment manufacturers with microprocessors, graphics processing units, and systems intellectual property. Arm’s products cater to diverse markets, including automotive, consumer technologies, and the Internet of Things (IoT). As a subsidiary of Kronos II LLC, Arm has positioned itself as a crucial partner in the technology ecosystem, emphasizing innovation and collaboration in a rapidly evolving landscape.
Key similarities and differences
Both QUALCOMM and Arm Holdings operate within the semiconductor industry and focus on developing technologies for wireless communications and computing. However, QUALCOMM emphasizes integrated circuits and software for wireless applications, while Arm specializes in CPU design and licensing. This distinction highlights their differing business models and target markets, with QUALCOMM being more involved in hardware and Arm focusing on intellectual property and licensing.
Income Statement Comparison
Below is a comparative analysis of the most recent income statements for Qualcomm Incorporated and Arm Holdings plc, focusing on key financial metrics.
| Metric | Qualcomm (QCOM) | Arm Holdings (ARM) |
|---|---|---|
| Market Cap | 180.02B | 142.68B |
| Revenue | 44.28B | 4.01B |
| EBITDA | 14.93B | 0.90B |
| EBIT | 13.33B | 0.72B |
| Net Income | 5.54B | 0.79B |
| EPS | 5.06 | 0.75 |
| Fiscal Year | 2025 | 2025 |
Interpretation of Income Statement
In the most recent fiscal year, Qualcomm showed notable growth in revenue, increasing to 44.28B, while net income stood at 5.54B. This reflects a solid operational performance despite a challenging market environment, with EBITDA margin improvements indicating efficient cost management. Conversely, Arm Holdings, with a revenue of 4.01B and a net income of 0.79B, demonstrated stability but at a much smaller scale. While both companies are in the semiconductor sector, Qualcomm’s robust growth trajectory and higher margins suggest a stronger competitive position in the market.
Financial Ratios Comparison
The table below provides a comparative view of key financial ratios for QUALCOMM Incorporated (QCOM) and Arm Holdings plc (ARM) based on the most recent data.
| Metric | QCOM | ARM |
|---|---|---|
| ROE | 26.13% | 11.58% |
| ROIC | 13.19% | 11.31% |
| P/E | 32.70 | 141.58 |
| P/B | 8.54 | 16.40 |
| Current Ratio | 2.82 | 5.20 |
| Quick Ratio | 2.10 | 5.20 |
| D/E | 0.70 | 0.05 |
| Debt-to-Assets | 29.54% | 3.99% |
| Interest Coverage | 18.61 | – |
| Asset Turnover | 0.88 | 0.45 |
| Fixed Asset Turnover | 9.44 | 5.61 |
| Payout ratio | 68.67% | 0 |
| Dividend yield | 2.10% | 0% |
Interpretation of Financial Ratios
QCOM demonstrates robust profitability and efficient asset utilization, evidenced by a high ROE and strong interest coverage ratio. However, its elevated P/E suggests potential overvaluation. ARM’s ratios indicate solid liquidity, yet its P/E ratio is considerably high, raising concerns about sustainability. The low debt levels across ARM signify lower financial risk, contrasting QCOM’s higher leverage. Investors should weigh growth potential against current valuations, particularly in ARM’s case.
Dividend and Shareholder Returns
QUALCOMM (QCOM) maintains a robust dividend policy with a payout ratio of 37% in FY2025, providing a dividend yield of 2.1%. The consistent dividend per share trend indicates strong cash flow coverage, though risks of unsustainable distributions warrant attention. Conversely, Arm Holdings (ARM) does not pay dividends, focusing instead on reinvestment for growth, supported by significant cash reserves. This strategy may enhance long-term shareholder value, albeit with inherent risks associated with high expectations for future growth. Overall, QCOM’s dividends and ARM’s reinvestment strategy both support sustainable long-term value creation, albeit through different approaches.
Strategic Positioning
QUALCOMM (QCOM) maintains a robust market share in the semiconductor industry, primarily through its leadership in 5G technologies. With a market cap of $180B, it faces competitive pressure from Arm Holdings (ARM), which specializes in microprocessor design and has a market cap of $143B. Both companies contend with technological disruption as the demand for advanced processing capabilities grows, particularly in AI and IoT sectors. The competitive landscape remains dynamic, requiring continuous innovation and strategic partnerships to sustain their market positions.
Stock Comparison
In this section, I analyze the weekly stock price movements of QUALCOMM Incorporated (QCOM) and Arm Holdings plc (ARM) over the past year, highlighting significant price changes and trading dynamics.
Trend Analysis
QUALCOMM Incorporated (QCOM) Over the past year, QCOM has experienced a price change of +22.94%, signaling a bullish trend. The stock has shown acceleration, with notable highs reaching 215.33 and lows at 127.46. The standard deviation of 16.77 indicates some volatility in its price movements. More recently, from September 14 to November 30, 2025, QCOM recorded a price increase of +3.87%, also showcasing a slight increase in momentum as indicated by a trend slope of 0.58.
Arm Holdings plc (ARM) In contrast, ARM has seen a remarkable price change of +102.18% over the past year, classified as a bullish trend; however, it indicates deceleration in its acceleration status. The stock reached highs of 181.19 and lows of 67.05, with a standard deviation of 23.44 reflecting significant volatility. Recently, from September 14 to November 30, 2025, ARM experienced a price decline of -10.01%, suggesting a bearish sentiment in the short term, further confirmed by a trend slope of -0.76.
In summary, while QCOM shows a stable bullish trend with recent positive momentum, ARM’s substantial yearly increase is tempered by recent declines, warranting careful consideration for potential investors.
Analyst Opinions
Recent analyst recommendations indicate a mixed sentiment towards QUALCOMM (QCOM) and Arm Holdings (ARM). For QCOM, analysts have assigned a rating of B+, highlighting strong return on equity and assets, making it a favorable buy. In contrast, ARM has received a B- rating, with concerns over its price-to-earnings metrics suggesting a more cautious approach, leading to a hold recommendation. Overall, the consensus for QCOM is a buy, while ARM leans toward hold as analysts weigh potential risks against growth opportunities.
Stock Grades
I have gathered the latest stock grades from reliable grading companies for two prominent companies: Qualcomm Incorporated (QCOM) and Arm Holdings plc (ARM). Here’s a look at their current ratings.
QUALCOMM Incorporated Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| B of A Securities | Maintain | Buy | 2025-11-06 |
| Piper Sandler | Maintain | Overweight | 2025-11-06 |
| Wells Fargo | Maintain | Underweight | 2025-11-06 |
| UBS | Maintain | Neutral | 2025-11-06 |
| Rosenblatt | Maintain | Buy | 2025-11-06 |
| Mizuho | Maintain | Outperform | 2025-11-06 |
| JP Morgan | Maintain | Overweight | 2025-11-04 |
| Rosenblatt | Maintain | Buy | 2025-10-28 |
| Citigroup | Maintain | Neutral | 2025-10-28 |
| UBS | Maintain | Neutral | 2025-10-27 |
Arm Holdings plc Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Loop Capital | Maintain | Buy | 2025-11-12 |
| Benchmark | Maintain | Hold | 2025-11-06 |
| Keybanc | Maintain | Overweight | 2025-11-06 |
| Needham | Maintain | Hold | 2025-11-06 |
| Mizuho | Maintain | Outperform | 2025-11-06 |
| Barclays | Maintain | Overweight | 2025-11-06 |
| UBS | Maintain | Buy | 2025-11-06 |
| TD Cowen | Maintain | Buy | 2025-11-06 |
| Rosenblatt | Maintain | Buy | 2025-11-06 |
| JP Morgan | Maintain | Overweight | 2025-11-06 |
Overall, both Qualcomm and Arm have maintained positive outlooks with a significant number of “Buy” and “Overweight” ratings. This reflects investor confidence in their future performance, although it’s crucial to stay aware of the caution expressed by a few analysts.
Target Prices
The current target price consensus for both QUALCOMM Incorporated (QCOM) and Arm Holdings plc (ARM) indicates optimistic prospects from analysts.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| QUALCOMM | 210 | 165 | 190 |
| Arm Holdings | 210 | 190 | 200 |
For QUALCOMM, analysts suggest a consensus target of 190, while the stock is currently trading at 168.09. Arm’s consensus target is 200, with the stock at 135.11. This points to significant upside potential for both companies based on analyst expectations.
Strengths and Weaknesses
The following table summarizes the strengths and weaknesses of QUALCOMM Incorporated (QCOM) and Arm Holdings plc (ARM) based on the most recent data.
| Criterion | QUALCOMM (QCOM) | Arm Holdings (ARM) |
|---|---|---|
| Diversification | High | Moderate |
| Profitability | Strong (12.5% Net Margin) | Moderate (19.8% Net Margin) |
| Innovation | High (R&D Focus) | High (Tech Licensing) |
| Global presence | Extensive | Growing |
| Market Share | Leading in 5G | Emerging |
| Debt level | Moderate (29.5%) | Low (3.9%) |
Key takeaways indicate that while QUALCOMM exhibits strong profitability and extensive global presence, it carries a moderate debt level. In contrast, Arm Holdings shows promising growth potential with low debt, but its market share is still developing.
Risk Analysis
The following table outlines the key risks associated with QUALCOMM Incorporated (QCOM) and Arm Holdings plc (ARM) based on the most recent information:
| Metric | QCOM | ARM |
|---|---|---|
| Market Risk | Moderate | High |
| Regulatory Risk | High | Moderate |
| Operational Risk | Moderate | High |
| Environmental Risk | Low | Low |
| Geopolitical Risk | High | Moderate |
In summary, QUALCOMM faces substantial regulatory and geopolitical risks, primarily due to its global operations and the semiconductor industry’s volatility. Conversely, Arm Holdings experiences heightened market and operational risks, particularly in the rapidly evolving tech landscape.
Which one to choose?
When comparing QUALCOMM (QCOM) and Arm Holdings (ARM), both companies exhibit strong revenue growth and profitability, but they cater to different segments of the semiconductor market. QCOM boasts a gross profit margin of 55.4% and a net profit margin of 12.5%, with an overall rating of B+ compared to ARM’s B- rating and a gross margin of 94.9%. Despite ARM’s impressive growth, reflected in its 102.18% price change over the last year, it carries higher valuation ratios, notably a P/E ratio of 141.6, making it less attractive for value-oriented investors.
For those focused on growth, ARM may appeal due to its robust market position. Conversely, investors prioritizing stability and established profitability may prefer QCOM, which shows a more favorable risk-reward balance. Both firms face industry risks, including competition and market dependence.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Go further
I encourage you to read the complete analyses of QUALCOMM Incorporated and Arm Holdings plc American Depositary Shares to enhance your investment decisions:
