While social media giant Facebook (NASDAQ:FB) is on track for the biggest wipeout in stock market history, chipmaker Qualcomm (NASDAQ:QCOM) quietly reported really good third-quarter numbers and QCOM stock is rallying in response.

Revenues topped expectations. So did earnings. Revenue growth was a very solid 6%. The guide was better than expected — in regard to both revenues and earnings. The company officially terminated its NXP Semiconductors (NASDAQ:NXPI) transaction and it is taking the cash saved from that transaction and rolling it into a $30 billion share repurchase program.

Shareholders celebrated the results, from the beats to the buybacks. QCOM stock rallied around 4% to above $60.

But, at present levels, it is tough to see the value in QCOM stock. This is a company still mired in a legal fight with Apple (NASDAQ:AAPL), the world’s largest smartphone company, and that provides serious operational headwinds for this company going forward. Without big licensing revenues from Apple, it is tough to see Qualcomm having enough long-term earnings power to justify the current price tag.

Thus, I think choppy trade is ahead for QCOM stock.

Here’s a deeper look.

Qualcomm’s Earnings Were Very Good

Third quarter numbers from Qualcomm were quite good.

Revenues were up 6% year over year. Operating profits were up 16%. Earnings were up 22%. Pre-tax margins were flat YoY. Those numbers are a healthy change of pace from the norm that has been established at Qualcomm ever since legal disputes with Apple began. Since the third quarter of 2017, when these disputes began to rear their ugly head, revenue growth has largely been negative, and earnings and margins have largely been down YoY.

Thus, it looks like Qualcomm is turning the page into a new era. This era, although still plagued by Apple revenue fallout, is one where Qualcomm is leveraging other growth drivers to sustain healthy growth.

Those other growth drivers are fairly promising. Despite losing go-forward iPhone revenue, Qualcomm remains a big player in the smartphone world, and has been a partner in multiple 5G roll-outs. The company is also getting a big boost from the auto industry, where Qualcomm is crafting a leadership position for itself in infotainment and 5G connected cars. Also, Qualcomm’s Snapdragon product is reaching beyond mobile and starting to be used in big secular growth markets, like AR/VR, AI and machine learning.

All together, Qualcomm is increasing its exposure to non-Apple products and lessening its reliance on Apple. As illustrated by solid third quarter numbers, this strategy is working.

Qualcomm Stock Is Overpriced

But a lack of Apple licensing revenues is still a problem for this company. And it’s a problem that isn’t priced into QCOM stock at current levels.

Licensing revenues aren’t the big driver of this business. But because the licensing business operates at 70%-plus pre-tax margins, they are a big profit driver for Qualcomm. Thus, a loss of licensing revenues has a big negative effect on margins and earnings.

Going forward, it looks like Apple won’t use Qualcomm for much of anything anymore. Considering Apple has huge share of the entire smart device market, that is a big loss. Inevitably, it means Qualcomm’s long-term earnings power isn’t that strong.

In the long-term, tailwinds from AR/VR, AI, connected cars and machine learning will offset lost Apple revenues. But we still aren’t talking about a big growth company. Revenue growth was just 6% this past quarter and margins were flat. That is about as good as it will get going forward.

After this year, I’m projecting roughly 3% revenue growth per year over the subsequent 5 years on top of slight margin improvement. Those assumptions, plus buybacks, leads me to believe that Qualcomm can do about $5 in earnings per share in fiscal 2023, which is well above the consensus.

A market-average 16 forward multiple on that implies a fiscal 2022 price target of $80. Discounted back by 10% per year, that equates to a fiscal 2018 price target in the mid-$50’s.

Bottom Line on QCOM Stock

The Qualcomm narrative is improving. But there is still the big Apple problem. That problem is not appropriately factored into the present valuation. Consequently, further upside potential looks bleak.

As of this writing, Luke Lango was long FB and AAPL.