InterDigital
IDCC
$342.42
+0.14%
InterDigital, Inc. is a research and development company that designs and licenses technologies for wireless, video, artificial intelligence, and related fields, generating most of its revenue from fixed-fee patent license agreements with a smaller portion from variable royalties. As a pure-play patent licensor, it holds a unique position in the technology sector, monetizing its extensive intellectual property portfolio across global markets, with significant exposure to China. The current investor narrative centers on the recent landmark patent license agreement with Amazon for streaming technology, which validates its video innovations and opens a new revenue stream, while the market debates the sustainability of its licensing growth and the impact of legal and regulatory dynamics on future royalty income.…
IDCC
InterDigital
$342.42
Related headlines
Investment Opinion: Should I buy IDCC Today?
Based on the analysis, I rate InterDigital as a Buy. The core thesis is that the company's high-margin licensing model, validated by the Amazon deal, offers significant upside potential, with analyst targets implying a 35.1% upside. The stock's strong profitability (net margin 48.76%, ROE 36.93%) and historical valuation support (trailing PE 20.19x vs. historical range) make it an attractive investment.
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IDCC 12-Month Price Forecast
The AI assessment is bullish with medium confidence, as the fundamental strengths of high margins and strong analyst support outweigh the risks of revenue volatility. The Amazon deal is a key catalyst that could drive re-rating, but the lack of consensus and limited coverage introduce uncertainty. If the company can deliver consistent revenue growth and secure more licensing deals, the stock could outperform. Conversely, any negative surprise in licensing revenue or legal outcomes would warrant a downgrade to neutral.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on InterDigital's 12-month outlook, with a consensus price target around $462.67 and implied upside of +35.1% versus the current price.
Average Target
$462.67
0 analysts
Implied Upside
+35.1%
vs. current price
Analyst Count
—
covering this stock
Price Range
$425 - $488
Analyst target range
With only 3 analysts covering the stock, the consensus is not available, but the average target price is $462.67, implying a 35.1% upside from the current price of $342.42. The analysts are bullish, with all recent actions being upgrades or reiterations of Buy ratings, including Jefferies upgrading from Hold to Buy in October 2025. The target range is $425.00 to $488.00, with the low target still 24.1% above the current price, indicating strong conviction. The high target of $488.00 assumes successful monetization of the Amazon deal and further licensing wins, while the low target likely reflects risks from litigation or slower adoption of new technologies. The wide spread of $63.00 suggests moderate uncertainty, but the overall sentiment is clearly positive.
Bulls vs Bears: IDCC Investment Factors
InterDigital presents a compelling bull case with its high-margin licensing model, recent Amazon deal, and attractive analyst targets, but the bear case highlights revenue volatility, a high forward PE, and market sensitivity. Currently, the bull case has stronger evidence given the strong profitability, historical valuation support, and positive analyst sentiment. The most important tension is whether the Amazon deal and future licensing wins can sustain revenue growth, as the recent decline and forward PE suggest potential earnings pressure. If the company can convert its pipeline into recurring revenue, the stock could re-rate higher; otherwise, the volatility may persist.
Bullish
- Amazon patent license unlocks new revenue: The landmark patent license agreement with Amazon for streaming technology, announced in June 2026, validates InterDigital's video innovations and opens a significant new revenue stream. This deal is a key catalyst that could drive recurring licensing income from a major tech player, supporting long-term growth.
- Strong profitability and high margins: InterDigital maintains exceptional profitability with a trailing net margin of 48.76% and a gross margin of 80.30%, reflecting its asset-light licensing model. ROE stands at 36.93%, well above industry norms, indicating efficient capital deployment and strong shareholder value creation.
- Analyst targets imply 35% upside: With an average analyst target price of $462.67 versus the current price of $342.42, the stock offers a potential upside of 35.1%. Even the lowest analyst target of $425.00 is 24.1% above the current price, signaling strong conviction among the few covering analysts.
- Undervalued relative to historical PE: The trailing PE of 20.19x is below the midpoint of its historical range (4.98x to 47.65x), suggesting the stock is not overvalued relative to its own history. This valuation provides a margin of safety for investors, especially given the company's high net margin and ROE.
Bearish
- Revenue volatility and recent decline: Q4 2025 revenue fell 37.41% year-over-year to $158.23 million, following a pattern of lumpy licensing revenue. This volatility makes earnings unpredictable and could deter investors seeking stable growth, as seen in the wide swings between quarters.
- Forward PE suggests earnings decline: The forward PE of 29.55x is significantly higher than the trailing PE of 20.19x, implying the market expects earnings to decrease in the coming year. This is consistent with the recent revenue slowdown and raises concerns about near-term profitability.
- High beta and market sensitivity: With a beta of 1.412, the stock is 41% more volatile than the market, amplifying downside risk during market downturns. This was evident in the 6-month price change of -4.49% despite a 1-month surge, reflecting sharp swings.
- Limited analyst coverage and thin liquidity: Only 3 analysts cover the stock, and the short ratio is 9.87, indicating relatively high short interest. This limited coverage can lead to information asymmetry and price inefficiencies, while high short interest suggests some investors are betting against the stock.
IDCC Technical Analysis
InterDigital's stock is in a strong uptrend over the past year, with a 1-year price change of +32.44%, significantly outperforming the S&P 500's +20.48% over the same period. The current price of $342.42 sits at 83% of its 52-week range (between $249.14 low and $412.60 high), indicating the stock is trading near the upper end of its range, reflecting robust momentum but also potential overextension. The stock's beta of 1.412 implies it is 41% more volatile than the market, which is important for risk management.
Beta
1.41
1.41x market volatility
Max Drawdown
-36.8%
Largest decline past year
52-Week Range
$249-$413
Price range past year
Annual Return
+32.4%
Cumulative gain past year
| Period | IDCC Return | S&P 500 |
|---|---|---|
| 1m | +32.2% | +3.6% |
| 3m | +31.2% | +2.7% |
| 6m | -4.5% | +11.4% |
| 1y | +32.4% | +18.7% |
| ytd | +5.0% | +12.3% |
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IDCC Fundamental Analysis
InterDigital's revenue has been volatile, with the most recent quarter (Q4 2025) showing revenue of $158.23 million, a 37.41% year-over-year decline from $252.80 million in Q4 2024. This decline follows a pattern of lumpy licensing revenue, as seen in Q2 2025 revenue of $300.60 million (up from $223.49 million in Q2 2024) and Q1 2025 revenue of $210.51 million (down from $263.54 million in Q1 2024). The company's net income in Q4 2025 was $42.97 million, with a net margin of 27.16%, down from 52.65% in Q4 2024, reflecting the revenue drop and higher operating expenses. Gross margin remains high at 79.56% in Q4 2025, consistent with its asset-light licensing model, but operating margin compressed to 30.20% from 64.29% a year earlier.
Quarterly Revenue
$158230000.0B
2025-12
Revenue YoY Growth
-37.4%
YoY Comparison
Gross Margin
79.6%
Latest Quarter
Free Cash Flow
$529368000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is IDCC Overvalued?
Given positive net income, the PE ratio is the primary valuation metric. The trailing PE is 20.19x, while the forward PE is 29.55x, indicating the market expects earnings to decline in the coming year, which is consistent with the recent revenue slowdown. The stock trades at a premium to the software industry average PE of 22x, with a 29% premium, but this is justified by its high net margin of 48.76% and ROE of 36.93%, which are exceptional. Historically, the trailing PE has ranged from 4.98x (Q1 2023) to 47.65x (Q4 2025), and the current 20.19x is below the midpoint, suggesting the stock is not overvalued relative to its own history.
PE
20.2x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 5x~48x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
13.6x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks include revenue concentration in a few large licensing agreements, as evidenced by the 37.41% YoY decline in Q4 2025 revenue, which highlights the lumpy nature of the business. The company's debt-to-equity ratio of 0.44 is manageable, but its reliance on continued licensing income to service debt and fund R&D (57.26 million in Q4 2025) creates cash flow variability. Additionally, the forward PE of 29.55x implies that the market expects earnings to decline, which could lead to multiple compression if results disappoint. The high net margin of 48.76% is a strength, but it also means any revenue shortfall disproportionately impacts net income, as seen in Q4 2025 when net margin fell to 27.16% from 52.65% a year earlier.
FAQ
The key risks include revenue volatility, as seen in the 37.41% YoY decline in Q4 2025, which can lead to unpredictable earnings. There is also concentration risk from a few large licensing agreements, and legal/regulatory risks, particularly in China where a significant portion of revenue is generated. The stock's high beta of 1.412 amplifies market downturns, and the forward PE of 29.55x implies potential earnings decline. Additionally, the short ratio of 9.87 indicates some bearish sentiment. These risks are ranked by severity, with revenue volatility being the most immediate concern.
The 12-month forecast for IDCC is bullish, with a base case target of $462.67 (35.1% upside) and a bull case target of $488.00 (42.5% upside). The bear case target is $249.14 (27.2% downside), reflecting risks from revenue decline or legal issues. The base case has a 50% probability, assuming the Amazon deal contributes moderately and revenue stabilizes. The bull case (30% probability) requires strong execution and new licensing wins, while the bear case (20% probability) would occur if the Amazon deal disappoints. Overall, the most likely scenario is the base case, with the stock trending toward the analyst average target.
IDCC is currently trading at a trailing PE of 20.19x, which is below the midpoint of its historical range (4.98x to 47.65x), indicating it is undervalued relative to its own history. Compared to the software industry average PE of 22x, it trades at a 29% premium, but this is justified by its superior net margin of 48.76% and ROE of 36.93%. The forward PE of 29.55x suggests the market expects earnings to decline, which could be a concern. Overall, the stock appears fairly valued to slightly undervalued, with the market pricing in moderate growth.
IDCC is a good buy for investors seeking a high-margin, growth-oriented stock with significant upside potential. The average analyst target of $462.67 implies a 35.1% upside from the current price of $342.42, and the stock's trailing PE of 20.19x is below its historical average, suggesting it is not overvalued. However, the stock is volatile (beta 1.412) and revenue is lumpy, so it is best suited for investors with a higher risk tolerance. If you believe the Amazon deal will drive sustained revenue growth, IDCC is a compelling buy.
IDCC is suitable for long-term investment, given its high margins and potential for sustained licensing revenue growth. The stock's beta of 1.412 makes it volatile in the short term, but its strong profitability and analyst support suggest it can deliver long-term gains. The recent 1-month surge of 32.17% indicates short-term momentum, but the 6-month decline of -4.49% highlights the risk of short-term trading. A minimum holding period of 3-5 years is recommended to ride out revenue volatility and benefit from the Amazon deal and future licensing agreements. For short-term traders, the stock's volatility offers opportunities, but it is better suited for patient investors.