InterDigital (IDCC) AI Stock Analysis

• Market Cap: $9.32B
• Dividend Yield: 0.66%
• Average Volume (3M): 272.99K
• Price to Earnings (P/E): 30.8
• Beta (1Y): 0.66
• Revenue Growth: 28.75%
• EPS Growth: 85.06%
• Country: US
• Employees: 430
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 1.20
• Shares Outstanding: 25,686,766
• 10 Day Avg. Volume: 241,081
• 30 Day Avg. Volume: 272,987
• PEG Ratio: 1.78
• Price to Book (P/B): 7.46
• Price to Sales (P/S): 9.85
• P/FCF Ratio: 15.54
• Enterprise Value/Market Cap: 1.02
• Enterprise Value/Revenue: 11.42
• Enterprise Value/Gross Profit: 13.04
• Enterprise Value/Ebitda: 16.25
• 1Y Price Target: $425.00
• Price Target Upside: 12.13% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): 7.41
• Revenue Forecast (FY): $692.99M

• Rating: 74 Outperform
• Price Target: $386.00 ▲(1.84% Upside)
• Action: Upgraded Date: 02/06/26
• Date: Action: Upgraded 02/06/26

The score is driven primarily by strong financial performance (high profitability, robust cash generation, and improving leverage). Technicals are supportive with the stock trading above key moving averages and positive MACD. Offsetting these positives are a mid-level valuation (P/E ~26.6 with a low dividend yield) and earnings-call risks tied to 2026 guidance stepping down from 2025, renewal timing, and higher litigation costs.

Positive Factors

Recurring Revenue / ARR Growth

A growing ARR base (24% YoY to $582M) increases predictable, contract-based licensing revenue and reduces reliance on one-off settlements. Durable ARR supports multi-year cash flow visibility, underpins reinvestment in R&D and enforcement, and provides a clear path toward the $1B ARR target by 2030.

Cash Generation & Margin Conversion

Very strong 2025 operating and free cash flow with high FCF-to-net-income conversion demonstrates robust cash generation. This durable cash profile funds R&D, M&A and enforcement without heavy external financing, improving strategic optionality and resilience through licensing cycles.

Large IP Portfolio & R&D / Standards Leadership

A deep, expanding SEP portfolio and continued R&D/standards leadership create sustainable licensing leverage. Growth in patents, AI capability via DeepRender, and standards roles strengthen differentiation, lengthen monetization runway across smartphones, CE, video and future 6G technologies.

Negative Factors

Litigation & Enforcement Uncertainty

Ongoing, multi-jurisdictional enforcement campaigns are lengthy and unpredictable; higher litigation costs and uncertain rulings can delay or reduce licensing revenue, divert management focus, and raise structural expense levels, weakening operating leverage over a multi-year horizon.

ARR Expirations and Renewal Timing Risk

Material expirations (~$92M) and partial renewals create durable timing risk for recurring revenue. Renewal delays or less favorable terms can compress ARR growth and introduce persistent quarter-to-quarter volatility in recognized revenue and cash flows until renewals are fully secured.

Revenue Volatility / Guidance Step-Down

Management's 2026 guidance below 2025 reflects structural sensitivity to contract timing, renewals and arbitration outcomes. This underlying revenue volatility constrains planning, may force conservative investment or payout policies, and signals that top-line stability depends on securing new long-term agreements.

InterDigital Business Overview & Revenue Model

Company Description

InterDigital, Inc., together with its subsidiaries, designs and develops technologies that enable and enhance wireless communications in the United States, China, South Korea, Japan, Taiwan, and Europe. It provides technology solutions for use in digital cellular and wireless products and networks, including 2G, 3G, 4G, 5G, and IEEE 802-related products and networks. The company develops cellular technologies, such as technologies related to CDMA, TDMA, OFDM/OFDMA, and MIMO for use in 2G, 3G, 4G, and 5G wireless networks, as well as mobile terminal devices; and 3GPP technology portfolio in 5G NR, beyond 5G (B5G), extended reality over wireless, and cellular Internet of Things (IoT) areas, as well as technologies for automobiles, wearables, smart homes, drones, and other connected consumer electronic products. It also provides video coding and transmission technologies; and engages in the research and development of artificial intelligence. The company's patented technologies are used in various products that include cellular phones, tablets, notebook computers, and wireless personal digital assistants; wireless infrastructure equipment, which comprise base stations; components, dongles, and modules for wireless devices; and IoT devices and software platforms. As of December 31, 2021, it had a portfolio of approximately 27,500 patents and patent applications related to wireless communications, video coding, display technology, and other areas. InterDigital, Inc. was incorporated in 1972 and is headquartered in Wilmington, Delaware.

How the Company Makes Money

InterDigital generates revenue primarily through the licensing of its extensive portfolio of patents and intellectual property related to wireless communication technologies. This includes licensing agreements with major mobile device manufacturers, network operators, and technology firms who utilize InterDigital's innovations in their products and services. The company also earns revenue from research and development contracts, collaborations with industry partners, and the sale of technology solutions that support the deployment and optimization of wireless networks. Strategic partnerships with key players in the telecommunications industry further enhance InterDigital's earning potential by facilitating the adoption of its technologies across diverse applications.

InterDigital Financial Statement Overview

Summary

Strong profitability and cash generation underpin the score (net margin expanded materially over 2021–2025; free cash flow closely tracks earnings with very strong 2025 OCF/FCF). Balance sheet leverage has improved meaningfully (debt-to-equity down to ~0.43 in 2025) with strong ROE, but revenue volatility (notably the 2025 decline) and year-to-year FCF variability temper the rating.

Income Statement

Profitability is a clear strength: annual net margin expanded from ~13% (2021) to ~49% (2025), with very strong operating profitability in recent years (EBITDA margin consistently ~55–65% since 2023). Revenue growth has been uneven—strong growth in 2022–2024, followed by a notable decline in 2025 (about -10%), which is the main near-term weakness. Also, 2025 gross profit/margin appears missing/zero in the provided data, limiting margin-quality read-through for that year.

Balance Sheet

Leverage looks manageable and improving: debt-to-equity moved down meaningfully from ~1.07 (2023) to ~0.43 (2025), alongside a sizable increase in equity. Returns on equity have been strong (roughly ~37–42% in 2023–2025), signaling effective profitability on the capital base. The main watch item is absolute debt remaining meaningful (~$475M in 2025) and prior periods showing higher leverage, indicating the balance sheet has improved but still benefits from continued discipline if earnings soften.

Cash Flow

Cash generation is a standout: free cash flow closely tracks earnings (free cash flow roughly ~79–98% of net income across the years shown), and 2025 produced very strong operating and free cash flow (~$544M and ~$529M). However, free cash flow growth turned negative in 2023 and again in 2025 (about -16%), highlighting volatility year-to-year. Cash flow coverage is mixed (strong in 2022, lower in 2023–2024, improving again in 2025), suggesting timing variability rather than consistently smooth conversion.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	834.01M	868.52M	549.59M	457.79M	425.41M
Gross Profit	669.67M	699.28M	470.19M	386.38M	360.78M
EBITDA	586.19M	544.75M	357.22M	225.63M	160.97M
Net Income	406.64M	358.61M	214.07M	93.69M	55.30M
Balance Sheet
Total Assets	2.06B	1.84B	1.77B	1.90B	1.63B
Cash, Cash Equivalents and Short-Term Investments	1.24B	958.21M	1.01B	1.20B	941.63M
Total Debt	505.84M	490.94M	625.16M	626.99M	444.37M
Total Liabilities	963.17M	978.31M	1.19B	1.17B	875.24M
Stockholders Equity	1.10B	857.22M	581.55M	724.89M	745.24M
Cash Flow
Free Cash Flow	528.56M	265.68M	169.11M	243.29M	90.84M
Operating Cash Flow	544.45M	271.53M	213.73M	286.04M	129.12M
Investing Cash Flow	-140.28M	109.45M	-85.17M	-314.71M	-36.91M
Financing Cash Flow	-201.45M	-272.39M	-388.76M	18.60M	-74.47M

InterDigital Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 379.02
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IDCC, the sentiment is Positive. The current price of 379.02 is above the 20-day moving average (MA) of 351.22, above the 50-day MA of 335.49, and above the 200-day MA of 300.10, indicating a bullish trend. The MACD of 9.27 indicates Negative momentum. The RSI at 61.23 is Neutral, neither overbought nor oversold. The STOCH value of 58.05 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for IDCC.

InterDigital Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NICE	76 Outperform	$7.11B	11.39	16.53%	―	9.46%	34.09%
IDCC	74 Outperform	$9.32B	30.77	41.53%	0.66%	28.75%	85.06%
PEGA	71 Outperform	$7.32B	20.29	57.32%	0.16%	17.00%	120.21%
SRAD	67 Neutral	$5.52B	50.25	9.79%	―	18.99%	66.43%
ESTC	65 Neutral	$5.94B	-56.14	-12.84%	―	16.98%	-265.85%
CVLT	64 Neutral	$3.89B	44.86	34.48%	―	22.02%	-55.25%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

InterDigital Corporate Events

InterDigital Renews Major Chinese Vendor Licensing Agreement

InterDigital has renewed a worldwide, non-exclusive, royalty-bearing license agreement with a major Chinese vendor for a five-year term, covering the vendor’s smartphones and other cellular-enabled devices under InterDigital’s standard essential cellular, WiFi, and HEVC patent portfolio. The agreement underscores the continued commercial relevance of InterDigital’s intellectual property and supports ongoing licensing revenue from a key market, reinforcing the company’s position as a significant patent licensor to global device manufacturers.

The most recent analyst rating on (IDCC) stock is a Buy with a $383.00 price target. To see the full list of analyst forecasts on InterDigital stock, see the IDCC Stock Forecast page.