⚠ Costs Are Rising While Revenue FallsHigh threat

Qualcomm (QCOM) — threat to the moat

Research went from 21% to 26% of revenue while revenue fell. That is the price of the diversification, paid up front.

Costs are rising while revenue falls, and the plan requires that to continue for three more years.

Costs rising as revenue falls, June 2026 quarter-4%Revenue change YoY+17%R&D change YoY+27%SG&A change YoYR&D went from 21% to 26% of revenue. Bars show magnitude; revenue fell.
What funding a multi-year pivot looks like from inside the income statement.

Research and development rose to $2,607 million in the June 2026 quarter from $2,226 million, and selling, general and administrative to $976 million from $771 million, on revenue that fell from $10,365 million to $9,947 million.1 R&D went from 21% of revenue to 26%.

That is the correct thing to do if the diversification works and an expensive mistake if it does not, and there is no way to tell from outside for several years.

The balance sheet can carry it — the dividend yields about 1.9% and buybacks have retired roughly a third of the shares since 2015 — but the combination of a shrinking core, a rising cost base and a maintained payout has a limit.23

The licensing line offers no help: flat at about $5.6 billion for three years.4

Watch operating cash flow against dividends, buybacks and R&D combined. That is the constraint that would force a choice.

References
  1. ReportedResearch and development rose to $2,607 million in the June 2026 quarter from $2,226 million, and selling, general and administrative to $976 million from $771 million, on revenue that fell from $10,365 million to $9,947 million.
    Qualcomm Incorporated, Form 10-Q for the quarter ended 28 June 2026 (SEC, CIK 804328). Revenues $9,947M for the quarter against $10,365M a year earlier, and $32,798M for the nine months against $33,013M; equipment and services $8,475M ($8,893M) and licensing $1,472M ($1,472M). Cost of revenues $4,670M, research and development $2,607M ($2,226M), selling, general and administrative $976M ($771M). Income before income taxes $2,462M ($2,952M); income tax expense $460M for the quarter, and a $4,136M income tax benefit for the nine months against a $1,034M expense — net income $2,002M ($2,666M) for the quarter and $12,377M ($8,658M) for the nine months. Diluted earnings per share $1.87 ($2.43) on 1,069 million diluted shares (1,099). QCT revenue streams for the quarter: handsets $5,086M ($6,328M), automotive $1,588M ($984M), IoT $1,830M ($1,681M), total QCT $8,504M ($8,993M). — Q3 FY2026 · publ. 2026-07-29 · source ↗
  2. Moat Explorer calcThe balance sheet can carry it — the dividend yields about 1.9% and buybacks have retired roughly a third of the shares since 2015 — but the combination of a shrinking core, a rising cost base and a maintained payout has a limit.
    Qualcomm (NASDAQ: QCOM) market data, 23 September 2026 - $196.03 a share, market capitalisation $209.37 billion on 1.07 billion shares, P/E 23.07, forward P/E 21.38, dividend yield 1.88% (cross-checked with companiesmarketcap, $209.47 billion) — September 2026 · publ. 2026-09-23 · source ↗
  3. Moat Explorer calcThe balance sheet can carry it — the dividend yields about 1.9% and buybacks have retired roughly a third of the shares since 2015 — but the combination of a shrinking core, a rising cost base and a maintained payout has a limit.
    Qualcomm (NASDAQ: QCOM) market data, 23 September 2026 - $196.03 a share, market capitalisation $209.37 billion on 1.07 billion shares, P/E 23.07, forward P/E 21.38, dividend yield 1.88% (cross-checked with companiesmarketcap, $209.47 billion) — September 2026 · publ. 2026-09-23 · source ↗
  4. ReportedThe licensing line offers no help: flat at about $5.6 billion for three years.
    Qualcomm Incorporated, Form 10-K FY2025 — Item 7, Management's Discussion and Analysis, and the reportable-segment note. QCT revenues $38,367M (2024 $33,196M, 2023 $30,382M) with EBT of $11,670M ($9,527M, $7,924M) at 30% of revenues (29%, 26%); QCT revenue streams handsets $27,793M ($24,863M, $22,570M), automotive $3,957M ($2,910M, $1,872M) and IoT $6,617M ($5,423M, $5,940M). QTL revenues $5,582M ($5,572M, $5,306M) against total costs and expenses of $1,539M ($1,545M, $1,678M), for EBT of $4,043M ($4,027M, $3,628M) — 72% of revenues in each of the three years. Reportable-segment revenues $43,949M, $38,786M and $35,716M against consolidated revenues of $44,284M, $38,962M and $35,820M. During the second quarter of fiscal 2025 Qualcomm executed final agreements for new long-term licensing arrangements. — FY2025 · publ. 2025-11-05 · source ↗
Sources
Generated September 23, 2026