The market is punishing a chip giant’s stock while it offers a cash return that most blue chips can’t match, forcing a hard look at the engine inside.

Shares of semiconductor designer Qualcomm (QCOM) trade around $164.79, having fallen 22% over the last three months. For every dollar an investor parks in the company at this price, the business hands back 6.0% in annual free cash. That compares to a 4.2% median for the S&P 500. The market is simultaneously marking the stock down and offering a premium cash yield for owning it. This raises a direct question for any investor: is this cash offer a bargain, or is the market right to price in a breakdown?

A highly profitable machine is funding the…