⚠ Volatile Returns Are the Honest Character of ItModerate threat

Qualcomm (QCOM) — threat to the moat

A small capital base produces 48.6% in a good year and 2.8% in a bad one, and Qualcomm has had both.

Return on invested capital that runs between 22% and 49% is not a stable number, and Qualcomm's has been to 2.8%.

The same structure, both extremesWACC ~10%14.2%FY20167.2%FY20172.8%FY201845.9%FY201948.6%FY202222.2%FY2025A small capital base cannot absorb anything, in either direction.
48.6% and 2.8% came out of the same balance sheet four years apart.

The series since fiscal 2015 reads 13.1, 14.2, 7.2, 2.8, 45.9, 35.1, 40.7, 48.6, 22.8, 28.2, 22.2.1 A fabless business with a small capital base produces spectacular returns when it is being paid and terrible ones when it is not, because the denominator cannot absorb anything.

The 2.8% year was fiscal 2018, when regulators on three continents were litigating the licensing model and the largest customer had stopped paying.2 Nothing about the technology or the capital base changed.

That volatility is the honest character of the moat. It is not a factory that keeps producing at a lower price; it is a legal and commercial position that either holds or does not.

The current reading of 22.2% is comfortably above a cost of capital nearer 10% and is roughly half the 2022 peak.

The metric is the spread over the hurdle across a full cycle, not in any single year — which for this company means including 2018.

References
  1. Moat Explorer calcThe series since fiscal 2015 reads 13.1, 14.2, 7.2, 2.8, 45.9, 35.1, 40.7, 48.6, 22.8, 28.2, 22.2.
    Return on invested capital for Qualcomm computed from SEC EDGAR XBRL filings — NOPAT divided by average operating invested capital, where NOPAT is operating income after the effective tax rate and invested capital is total assets less current liabilities less cash. The series for fiscal 2015 to 2025 is 13.1%, 14.2%, 7.2%, 2.8%, 45.9%, 35.1%, 40.7%, 48.6%, 22.8%, 28.2% and 22.2%. The underlying operating income series, from the same filings, falls from $6,495M in fiscal 2016 to $2,581M in 2017 and $621M in 2018 before recovering to $7,667M in fiscal 2019. — FY2015-FY2025 · publ. 2025-11-05 · source ↗
  2. Moat Explorer calcThe 2.8% year was fiscal 2018, when regulators on three continents were litigating the licensing model and the largest customer had stopped paying.
    Return on invested capital for Qualcomm computed from SEC EDGAR XBRL filings — NOPAT divided by average operating invested capital, where NOPAT is operating income after the effective tax rate and invested capital is total assets less current liabilities less cash. The series for fiscal 2015 to 2025 is 13.1%, 14.2%, 7.2%, 2.8%, 45.9%, 35.1%, 40.7%, 48.6%, 22.8%, 28.2% and 22.2%. The underlying operating income series, from the same filings, falls from $6,495M in fiscal 2016 to $2,581M in 2017 and $621M in 2018 before recovering to $7,667M in fiscal 2019. — FY2015-FY2025 · publ. 2025-11-05 · source ↗
Sources
Generated September 23, 2026