Silicon Motion Technology Stock (NASDAQ: SIMO)

Silicon Motion Technology (NASDAQ:SIMO) Stock, Quote.Headers.trade-ideas

Silicon Motion Technology

Silicon Motion Technology Corp is active in the semiconductor industry and focuses on designing, developing, and marketing of controllers for managing NAND flash used in embedded storage applications, such as eMMC embedded memory. Its only operating segment is to develop NAND flash controllers and SSDs solutions. The company derives revenue from product categories such as Mobile Storage, Mobile Communications, and others. Silicon's geographical segments are Taiwan, the United States, Korea, China, Singapore, Malaysia, and others. The company products are used in Personal Computing, Smartphone/Tablet/CE, Flash Card/USB Flash Drive, Industrial and Embedded, Automotive, and Enterprise and Data centers.

Earnings

News

Markets

Analyst Ratings

Tech

Trading Ideas

JNPR

SIMO

Juniper Networks, Inc. (NYSE: JNPR) recently announced that Telxius, a leading global connectivity provider, has opted to leverage Juniper Converged Optical Routing Architecture (CORA) and PTX Series Packet Transport Routers to upgrade its network infrastructure.

Juniper Solution Boosts Telxius&#39; Network Infrastructure

GNRC

Generac Holdings Inc. (NYSE: GNRC) recently announced that it has been granted a hefty sum of up to $200 million, spanning over five years, by the U.S. Department of Energy (&#34;DOE&#34;). This grant belongs to the $1 billion Puerto Rico Energy Resilience Fund (PR-ERF).

Generac Wins $200M Grant From DOE for Solar Program

Earnings Misses

ERIC

Ericsson (NASDAQ: ERIC) reported modest second-quarter 2024 results, with the top line surpassing the Zacks Consensus Estimate and the bottom line missing the same.

Ericsson Q2 Earnings Miss Estimates, Top Line Falls

Silicon Motion Technology Corporation - American Depositary Shares, each representing four ordinary shares

Silicon Motion Technology Corp

SIMON PROP GRP REIT ORD

SIMON WORLDWIDE INC by Simon Worldwide, Inc.

Simon Property Group Inc

Simon Property Group, Inc. Simon Property Group 8 3/8% Series J Cumulative Redeemable Preferred Stock

WIIM

Silicon Motion Technology shares are trading lower after Morgan Stanley lowered its price target on the stock from $78 to $65.

Morgan Stanley analyst Ray Wu maintains Silicon Motion Technology (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SIMO#NASDAQ">SIMO</a>) with a Overweight and lowers the price target from $78 to $65.

Price Target

Morgan Stanley Maintains Overweight on Silicon Motion Technology, Lowers Price Target to $65

ACLS

AEHR

ALAB

AMAT

AMBA

AMKR

AOSL

ASML

ASTI

AVGO

CAMT

CRDO

DIOD

ENPH

ENTG

FORM

FSLR

INDI

INTC

KLAC

KLIC

LAES

LRCX

LSCC

MCHP

MKSI

MPWR

MRVL

MTSI

NVMI

NVTS

NXPI

OLED

ONTO

PLAB

POWI

QCOM

QRVO

RMBS

SEDG

SITM

SKYT

SLAB

SWKS

SYNA

TSEM

UCTT

Shares of semiconductor stocks are trading lower amid overall market weakness. A drop in the price of NVIDIA may weigh down the sector.

Silicon Motion Technology shares are trading lower after B of A Securities downgraded the stock from Buy to Underperform and lowered its price target from $90 to $60.

B of A Securities analyst Simon Woo downgrades Silicon Motion Technology (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SIMO#NASDAQ">SIMO</a>) from Buy to Underperform and lowers the price target from $90 to $60.

Downgrades

B of A Securities Downgrades Silicon Motion Technology to Underperform, Lowers Price Target to $60

ALGM

AXTI

NVDA

SMTC

VECO

WOLF

Shares of semiconductor stocks are trading higher amid overall market strength as stock rebound following upbeat US economic data, which could be alleviating recession worries.

AEYE

AILE

AKAM

ARLO

ASGN

AUUD

BLZE

BNAI

CHKP

DAVE

DGLY

FFIV

GREE

GWRE

IDAI

INTA

IPGP

JAMF

LOGI

MITK

MOVE

MTLS

NICE

Nuveen California Dividend Advantage Municipal Fund 2

OBLG

OOMA

RGTI

SDIG

SGMA

SOUN

SPSC

WETH

Shares of stocks in the broader tech sector are trading lower amid a sell off due to US economy concerns.

B. Riley Securities analyst Craig Ellis maintains Silicon Motion Technology (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SIMO#NASDAQ">SIMO</a>) with a Buy and lowers the price target from $112 to $95.

B. Riley Securities Maintains Buy on Silicon Motion Technology, Lowers Price Target to $95

Business Outlook "Our new programs with our flash maker customers are expected to further scale throughout this year as the move to increase outsourcing continues to build the foundation for the long-term revenue and profitability growth of our business," said Wallace Kou, President and CEO of Silicon Motion. "Our highly differentiated controller solutions for PCs and smartphones deliver high performance, higher density and lower cost solid state storage to enable cutting edge applications such as AI-at-the-edge. Despite the softness in the retail SSD market that is evident across the industry, we are confident that we can achieve our previous full-year outlook based on the ongoing strength of our growing NAND OEM business."
For the third quarter of 2024, management expects:
<figure class="table"> 
<table>
<tbody>
<tr>
<td>($ in millions)</td>
<td>GAAP</td>
<td>Non-GAAP Adjustment</td>
<td>Non-GAAP</td>
</tr>
<tr>
<td>Revenue</td>
<td>$205 to $216 &nbsp;-2.5% to +2.5% Q/Q +19% to 25% Y/Y</td>
<td>--</td>
<td>$205 to $216 &nbsp;-2.5% to +2.5% Q/Q +19% to 25% Y/Y</td>
</tr>
<tr>
<td>Gross margin</td>
<td>46.0% to 47.0%</td>
<td>Approximately $0.1&#x2A;</td>
<td>46.0% to 47.0%</td>
</tr>
<tr>
<td>Operating margin</td>
<td>10.7% to 12.3%</td>
<td>Approximately $6.4 to $7.4&#x2A;&#x2A;</td>
<td>14.3% to 15.3%</td>
</tr>
</tbody>
</table>
</figure>
&#x2A; Projected gross margin (non-GAAP) excludes $0.1 million of stock-based compensation. &#x2A;&#x2A; Projected operating margin (non-GAAP) excludes $6.4 million to $7.4 million of stock-based compensation and dispute related expenses.
For the full year 2024, management expects:
<figure class="table"> 
<table>
<tbody>
<tr>
<td>($ in millions)</td>
<td>GAAP</td>
<td>Non-GAAP Adjustment</td>
<td>Non-GAAP</td>
</tr>
<tr>
<td>Revenue</td>
<td>$800 to $830 +25% to 30% Y/Y</td>
<td>--</td>
<td>$800 to $830 +25% to 30% Y/Y</td>
</tr>
<tr>
<td>Gross margin</td>
<td>45.9% to 46.9%</td>
<td>Approximately $0.6&#x2A;</td>
<td>46.0% to 47.0%</td>
</tr>
<tr>
<td>Operating margin</td>
<td>10.9% to 13.3%</td>
<td>Approximately $29.0 to $31.0&#x2A;&#x2A;</td>
<td>14.8% to 16.8%</td>
</tr>
</tbody>
</table>
</figure>
&#x2A; Projected gross margin (non-GAAP) excludes $0.6 million of stock-based compensation and restructuring charge. &#x2A;&#x2A; Projected operating margin (non-GAAP) excludes $29.0 million to $31.0 million of stock-based compensation, dispute related expenses, restructuring charge and loss from settlement of litigation.

Guidance

Silicon Motion Technology Sees Q3 Revenue $205M-$216M Vs $212.62M Est.; FY24 Revenue $800M-$830M Vs $822.67M Est.

Silicon Motion Technology (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SIMO#NASDAQ">SIMO</a>) reported quarterly earnings of $0.96 per share which beat the analyst consensus estimate of $0.95 by 1.05 percent. The company reported quarterly sales of $210.670 million which beat the analyst consensus estimate of $206.746 million by 1.90 percent. This is a 50.09 percent increase over sales of $140.361 million the same period last year.

Earnings Beats

Silicon Motion Technology Q2 2024 Adj. EPS $0.96 Beats $0.95 Estimate, Sales $210.670M Beat $206.746M Estimate

ACMR

CEVA

CRUS

ICHR

WISA

Shares of chip stocks are trading lower amid overall market weakness. Recent earnings from large names in the sector may also be weighing on the sector.

Juniper Networks, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/jnpr#NYSE">JNPR</a>) recently announced that Telxius, a leading global connectivity provider, has opted to leverage Juniper Converged Optical Routing Architecture (CORA) and PTX Series Packet Transport Routers to upgrade its network infrastructure. Telxius is aiming to scale its core and edge network infrastructure to 400G, thereby enhancing network capacity and boosting connectivity to metro networks and data center interconnects.
With the growing digital economy, there is an increasing proliferation of high bandwidth intensive applications among customers. Frequent network upgrades to address this surge in demand is a challenging task, as it immensely raises operational costs and also complicates network architecture.
Juniper&#39;s solution effectively addresses this issue. The company&#39;s offerings include CORA, a flexible, sustainable and automated solution that utilizes IP (Internet Protocol) over DWDM (Dense Wavelength Division Multiplexing) technology. By integrating IP routing and optical transport functions into a single network layer, the solution reduces complexity in network architecture, simplifies operations, significantly reduces energy consumption and maximizes routing platform capacity.&nbsp;
The solution facilitates seamless upgrades to higher bandwidths, accommodating increasing data traffic without major infrastructure overhauls. By eliminating the need for separate IP routers and optical transport systems, IPoDWDM reduces equipment-related costs and space requirements.
Telxius boasts an extensive global footprint, delivering connectivity across Spain, the Americas and other parts of Europe. Its network includes more than 100,000 km of fiber optic submarine cables and terrestrial backhauls, offering a wide array of capacity, colocation and security services. Migration of key architecture to Juniper&#39;s CORA and PTX will free up a significant amount of reserved bandwidth for Telxius and ensure a seamless extension to 400G capacity.&nbsp;
Juniper&#39;s solution will offer enhanced network scalability and bandwidth efficiency while optimizing power and space utilization. This will create a more sustainable, resilient and future-proof network infrastructure, enabling Telxius to deliver consistent connectivity to end users and support advanced applications.
The collaboration with Telxius underscores the growing demand for Juniper&#39;s comprehensive networking portfolio. This will likely boost its prospects and strengthen its position in the wireless equipment industry.
Shares of Juniper have gained 23.6% over the past year compared with the industry&#39;s growth of 39%.
<img alt="Zacks Investment Research" src="https://staticx-tuner.zacks.com/images/articles/charts/8e/71830.jpg?v=195436809" />
Image Source: Zacks Investment Research
<h3>Zacks Rank and Other Key Picks</h3>
Juniper currently carries a Zacks Rank #2 (Buy).
NVIDIA Corporation, sporting a Zacks Rank #1 (Strong Buy) at present, delivered a trailing four-quarter earnings surprise of 18.43%, on average. In the last reported quarter, it delivered an earnings surprise of 11.48%.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company&#39;s focus evolved from PC graphics to AI-based solutions that support high-performance computing, gaming and virtual reality platforms.
Motorola Solutions Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/msi#NYSE">MSI</a>) provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure services. Motorola carries a Zacks Rank #2 at present.
It delivered a trailing four-quarter average earnings surprise of 7.54% and has a long-term growth expectation of 9.47%. In the last reported quarter, Motorola delivered an earnings surprise of 11.51%.
Silicon Motion Technology Corporation (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/simo#NASDAQ">SIMO</a>), carrying a Zacks Rank #2 at present, delivered a trailing four-quarter average earnings surprise of 4.72%.
It is a leading developer of microcontroller ICs for NAND flash storage devices. The semiconductor company also designs, develops and markets high-performance, low-power semiconductor solutions for original equipment manufacturers and other customers.
<a href="https://www.zacks.com/stock/news/2304784/juniper-jnpr-solution-boosts-telxius-network-infrastructure?cid=CS-BENZ-FT-analyst_blog|company_news_tech_sector-2304784">To read this article on Zacks.com click here.</a>

Juniper Solution Boosts Telxius' Network Infrastructure

Generac Holdings Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/gnrc#NYSE">GNRC</a>) recently announced that it has been granted a hefty sum of up to $200 million, spanning over five years, by the U.S. Department of Energy (&quot;DOE&quot;). This grant belongs to the $1 billion Puerto Rico Energy Resilience Fund (PR-ERF).
Through the PR-ERF&#39;s Programa Acceso Solar (Solar Access Program), Generac will fuel the installation of residential solar and battery storage systems for underdeveloped Puerto Rican households, with installations commencing in August 2024.
By collaborating with its local project affiliates in Puerto Rico, the company aims to elevate the conditions in low-income areas suffering from frequent and extended power disruptions by supplying clean and resilient energy solutions. The program will also empower households with residents who have energy-dependent disabilities.
Furthermore, the initiative is likely to generate potential job opportunities in the clean energy field and simultaneously foster Puerto Rico&#39;s vision of achieving a 100% renewable energy target by 2050.
To support the program, Generac will tie up with multiple companies like PathStone. It is a nonprofit organization that has been rendering humanitarian services and developing the workforce in Puerto Rico for more than two decades now. Alongside the Interstate Renewable Energy Council, PathStone will coordinate additional local community efforts to serve as liaisons between Solar Ambassadors, installers and eligible recipients.
FR-BLDM, a leading local contractor with deep expertise in government program management, will lead installations in association with other local, small, family-owned businesses in Puerto Rico. Juapi Energy, a PWRcell installer that serves as a Generac Service Dealer in Puerto Rico, will provide service support to residents and execute installations.
Also, Palmetto, a renowned climate technology company expediting the adoption of clean energy, will extend three of its commercial software applications&mdash; a fintech platform, installation partner portal and asset management services &mdash; to empower homeowners&#39; shift to solar and storage in Puerto Rico.
These partnerships will not only enhance the program&#39;s efficiency but also develop workforce and training sessions to provide jobs for residents in underprivileged communities across Puerto Rico.
Waukesha, WI-based Generac is one of the leading manufacturers of backup and prime power generation systems for residential and business applications, as well as energy monitoring and management devices and services, along with other power products.
The company is continuously working to solidify its foothold in the Power Generation industry. Recently, it expanded its energy management solutions portfolio with the addition of a cutting-edge electric vehicle charger. The level 2 charger (available in two formats, the 40A Plus and 48A Plus models) is built with Wi-Fi and Bluetooth connectivity for an enhanced user experience, having charging speeds eight times faster than an L1 charger.
At present, GNRC sports a Zacks Rank #1 (Strong Buy). The stock has gained 7.6% in the past year compared with the industry&#39;s growth of 1.8%.
<img alt="Zacks Investment Research" src="https://staticx-tuner.zacks.com/images/articles/charts/44/71795.jpg?v=1174533689" />
Image Source: Zacks Investment Research
<h3>Stocks to Consider</h3>
NVIDIA Corporation, sporting a Zacks Rank #1 at present, delivered a trailing four-quarter earnings surprise of 18.43%, on average. In the last reported quarter, it delivered an earnings surprise of 11.48%.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company&#39;s focus evolved from PC graphics to AI-based solutions that support high-performance computing, gaming and virtual reality platforms.
Motorola Solutions Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/msi#NYSE">MSI</a>) provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure services. Motorola carries a Zacks Rank #2 (Buy) at present.
It delivered a trailing four-quarter average earnings surprise of 7.54% and has a long-term growth expectation of 9.47%. In the last reported quarter, Motorola delivered an earnings surprise of 11.51%.
Silicon Motion Technology Corporation (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/simo#NASDAQ">SIMO</a>), carrying a Zacks Rank #2 at present, delivered a trailing four-quarter average earnings surprise of 4.72%.
SIMO is a leading developer of microcontroller ICs for NAND flash storage devices. The semiconductor company also designs, develops and markets high-performance, low-power semiconductor solutions for original equipment manufacturers and other customers.
<a href="https://www.zacks.com/stock/news/2304611/generac-gnrc-wins-200m-grant-from-doe-for-solar-program?cid=CS-BENZ-FT-analyst_blog|company_news_tech_sector-2304611">To read this article on Zacks.com click here.</a>

PDFS

Shares of chip stocks are trading lower amid reports Biden is considering further China restrictions. The sector may also be down following soft guidance from ASML.

Ericsson (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/eric#NASDAQ">ERIC</a>) reported modest second-quarter 2024 results, with the top line surpassing the Zacks Consensus Estimate and the bottom line missing the same. In spite of steady sales in the Enterprise, Cloud Software and Services segment, soft demand in the Networks led to a top-line contraction year over year. Solid sales growth in North America is offset by declining capex investments in India. Higher IPR licensing revenues, cost optimization and a robust portfolio boosted the gross margin. Healthy improvement in free cash flow backed by improvement in working capital is a tailwind.
<h3>Net Income</h3>
Ericsson reported a net loss of SEK 11 billion ($1.03 billion) or a loss of SEK 3.34 (31 cents) per share in the second quarter compared with a net loss of SEK 0.6 billion or SEK 0.21 per share in the prior-year quarter. Non-cash impairment charges of SEK 11.4 billion and a decline in net sales impacted the bottom line during the quarter. Adjusted earnings came in at a penny per share, missing the Zacks Consensus Estimate of 5 cents.
<div class="chart_embed">
<h3>Ericsson Price, Consensus and EPS Surprise</h3>
<h3><img alt="Ericsson Price, Consensus and EPS Surprise" src="https://staticx-tuner.zacks.com/images/charts/17/1720790812.png" style="height:265px; width:570px" title="" /></h3>
Ericsson price-consensus-eps-surprise-chart | Ericsson Quote
</div>
<h3>Revenues</h3>
Ericsson generated SEK 59.8 billion ($5.59 billion) in revenues, down 7% year over year. Demand softness in the Networks segment impeded the top line. However, the top line surpassed the Zacks Consensus Estimate of $5.29 billion.
<h3>Segment Results</h3>
The Networks segment generated SEK 37.7 billion ($3.53 billion), down 11% from the year-ago quarter&#39;s tally of SEK 42.4 billion. The top line beat our revenue estimate of SEK 36.3 billion. The segment&#39;s gross margin improved to 46.1% from 39.3% in the year-ago quarter. The unit registered a 55% sales decline in South East Asia, Oceania and India. Following a record level of investments in 2023, operator capex significantly declined in India. However, sales in the Networks segment from North America improved 20% year over year due to increased network investments.
Cloud Software and Services contributed SEK 15.2 billion ($1.42 billion) in revenues, marginally up from SEK15.1 billion in the year-ago quarter. The top line surpassed our revenue estimate of SEK 14.7 billion. Adjusted gross margin improved to 37.2% from 33.9% in the prior-year quarter. Increased IPR licensing revenues, commercial discipline and improvement in delivery performance propelled the gross margin.
Enterprise sales remained flat at SEK 6.5 billion ($608 million), up 2% year over year. Net sales beat our revenue estimate of SEK 4.77 billion. Growth in Enterprise Wireless Solutions supported the top line. However, declining sales in the Global Communication Platform reversed the positive trend. Adjusted gross margin was 51.1%, up from 46.3% in the year-ago quarter.
Other revenues was SEK 0.5 billion ($47 million) matching the prior-year quarter&#39;s figure of SEK 0.5 billion.
Region-wise, South-East Asia, Oceania and India registered revenues of SEK 7.7 billion ($720 million), down from SEK 13.8 billion in the prior-year quarter. Revenues from North East Asia fell 10% year over year to SEK 4.6 billion ($430 million). Net sales from North America increased 15% year over year to SEK 16.6 billion ($1.55 billion) backed by contract wins and growing network investments.
Europe and Latin American markets witnessed a 2% year-over-year decline to SEK 15.6 billion ($1.46 billion). Revenues in the Middle East and Africa fell 8% to SEK 4.9 billion ($458 million) due to a slowdown in capex investments. Revenues from other regions rose to SEK 10.4 billion ($972 million) from SEK 9.8 billion in the prior-year quarter.
<h3>Other Details</h3>
Adjusted gross increased to SEK 26.3 billion ($2.46 billion) from the year-ago figure of SEK 24.7 billion. Adjusted gross margin was 43.9%, up from 38.3% in the year-earlier quarter, driven by an enhanced gross margin in the Networks segment. Higher IPR licensing revenues, cost reduction actions and a competitive product portfolio elevated the gross margin.
<h3>Cash Flow and Liquidity</h3>
Ericsson generated SEK 9.3 billion ($870 million) cash from operating activities during the quarter. As of Jun 30, 2024, the company had a net cash of SEK 13.1 billion ($12.36 billion) with SEK 26.1 billion liabilities for post-employment benefits.
<h3>Outlook</h3>
Management anticipates market conditions to remain challenging this year due to a slowdown in network investments in India. However, contract deliveries in North America will likely improve net sales in the second half of the year.
For the third quarter of 2024, revenues from the Networks, Cloud Software and Services segment are expected to follow the average seasonality between the second and the third quarter in the last three years. Adjusted Gross margin in the Networks segment is likely to be in the range of 45-47%. Restructuring charges are projected to be around SEK 3-4 billion in 2024.
<h3>Zacks Rank &amp; Stocks to Consider</h3>
Ericsson currently carries a Zacks Rank #3 (Hold).
NVIDIA Corporation, sporting a Zacks Rank #1 (Strong Buy) at present, delivered a trailing four-quarter earnings surprise of 18.43%, on average. In the last reported quarter, it delivered an earnings surprise of 11.48%.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company&#39;s focus evolved from PC graphics to AI-based solutions that support high-performance computing, gaming and virtual reality platforms.
Motorola Solutions Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/msi#NYSE">MSI</a>) provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure services. Motorola carries a Zacks Rank #2 (Buy) at present.
It delivered a trailing four-quarter average earnings surprise of 7.54% and has a long-term growth expectation of 9.47%. In the last reported quarter, Motorola delivered an earnings surprise of 11.51%.
Silicon Motion Technology Corporation (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/simo#NASDAQ">SIMO</a>), carrying a Zacks Rank #2 at present, delivered a trailing four-quarter average earnings surprise of 4.72%.
It is a leading developer of microcontroller ICs for NAND flash storage devices. The semiconductor company also designs, develops and markets high-performance, low-power semiconductor solutions for original equipment manufacturers and other customers.
Note: SEK 1 = $0.0935081 (period average from Apr 1, 2024 to Jun 30, 2024); SEK 1 = $0.0943156 (as of Jun 30, 2024).
<a href="https://www.zacks.com/stock/news/2300947/ericsson-eric-q2-earnings-miss-estimates-top-line-falls?cid=CS-BENZ-FT-analyst_blog|earnings_article-2300947">To read this article on Zacks.com click here.</a>

The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock&#39;s price. Do they really matter, though?
Let&#39;s take a look at what these Wall Street heavyweights have to say about Silicon Motion (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/simo#NASDAQ">SIMO</a>) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.
Silicon Motion currently has an average brokerage recommendation of 1.11, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by nine brokerage firms. An ABR of 1.11 approximates between Strong Buy and Buy.
Of the nine recommendations that derive the current ABR, eight are Strong Buy and one is Buy. Strong Buy and Buy respectively account for 88.9% and 11.1% of all recommendations.
Brokerage Recommendation Trends for SIMO
<img alt="Broker Rating Breakdown Chart for SIMO" class="chart" src="https://staticx-tuner.zacks.com/images/yesopchart/brokerage_bar/SIMO_07112024.png" style="width:100%" title="" /> 
While the ABR calls for buying Silicon Motion, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.
Are you wondering why? The vested interest of brokerage firms in a stock they cover often results in a strong positive bias of their analysts in rating it. Our research shows that for every &quot;Strong Sell&quot; recommendation, brokerage firms assign five &quot;Strong Buy&quot; recommendations.
In other words, their interests aren&#39;t always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock&#39;s price movement.
Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock&#39;s price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.
Zacks Rank Should Not Be Confused With ABR
In spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.
Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.
Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide.
In contrast, the Zacks Rank is driven by earnings estimate revisions. And near-term stock price movements are strongly correlated with trends in earnings estimate revisions, according to empirical research.
In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.
There is also a key difference between the ABR and Zacks Rank when it comes to freshness. When you look at the ABR, it may not be up-to-date. Nonetheless, since brokerage analysts constantly revise their earnings estimates to reflect changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in predicting future stock prices.
Is SIMO a Good Investment?
In terms of earnings estimate revisions for Silicon Motion, the Zacks Consensus Estimate for the current year has increased 0.8% over the past month to $3.55.
Analysts&#39; growing optimism over the company&#39;s earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.
The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for Silicon Motion.
Therefore, the Buy-equivalent ABR for Silicon Motion may serve as a useful guide for investors.
<a href="https://www.zacks.com/stock/news/2299900/silicon-motion-simo-is-considered-a-good-investment-by-brokers-is-that-true?cid=CS-BENZ-FT-fundamental_analysis|average_broker_rating-2299900">To read this article on Zacks.com click here.</a>

Silicon Motion Is Considered a Good Investment by Brokers: Is That True?

Needham analyst Quinn Bolton maintains Silicon Motion Technology (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SIMO#NASDAQ">SIMO</a>) with a Buy and raises the price target from $85 to $94.

Needham Maintains Buy on Silicon Motion Technology, Raises Price Target to $94

B. Riley Securities analyst Craig Ellis maintains Silicon Motion Technology (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SIMO#NASDAQ">SIMO</a>) with a Buy and raises the price target from $109 to $112.

B. Riley Securities Maintains Buy on Silicon Motion Technology, Raises Price Target to $112

B. Riley Securities analyst Craig Ellis maintains Silicon Motion Technology (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SIMO#NASDAQ">SIMO</a>) with a Buy and raises the price target from $105 to $109.

B. Riley Securities Maintains Buy on Silicon Motion Technology, Raises Price Target to $109

Silicon Motion Technology Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SIMO#NASDAQ">SIMO</a>) (&quot;Silicon Motion&quot; or the &quot;Company&quot;), a global leader in NAND flash controllers for solid state storage devices, announces that based on its preliminary&nbsp;second quarter&nbsp;financial results, sequential revenue growth is expected to be slightly above the high-end of its original&nbsp;guidance&nbsp;range of&nbsp;$199 million&nbsp;to&nbsp;$208 million, which the company issued on May 3, 2024. Gross margin (non-GAAP) is expected to be near the high-end of the company&#39;s original&nbsp;45.0%&nbsp;to&nbsp;46.0%&nbsp;guidance&nbsp;range.

Silicon Motion Announces Preliminary Q2 2024 Revenue Above The High-end Of Its Original Guidance Range Of $199M-$208M Vs $203.88M Est

Silicon Motion Technology Corporation 2024 Q2 - Results - Earnings Call Presentation

Silicon Motion Technology Corporation (SIMO) Q2 2024 Earnings Call Transcript

Silicon Motion (SIMO – Research Report), the Technology sector company, was revisited by a Wall Street analyst today. Analyst Quinn Bolton from Nee...

Buy Rating Affirmed for Silicon Motion Technology on Strong Growth Prospects and Strategic Investments

<a href="https://investorplace.com">InvestorPlace - Stock Market News, Stock Advice &amp; Trading Tips</a>
Artificial intelligence (AI) is rapidly expanding into various industries. However, not all companies have been able to benefit from this growth immediately. Lesser-known data center stocks, for example, are experiencing strong demand. This could substantially boost profits as big tech continues pouring billions into expanding AI capabilities.



Massive AI development investments of Alphabet (NASDAQ:<a href="https://investorplace.com/stock-quotes/goog-stock-quote/">GOOG</a>, NASDAQ:<a href="https://investorplace.com/stock-quotes/googl-stock-quote/">GOOGL</a>), Microsoft (NASDAQ:<a href="https://investorplace.com/stock-quotes/msft-stock-quote/">MSFT</a>), Meta (NASDAQ:<a href="https://investorplace.com/stock-quotes/meta-stock-quote/">META</a>) and Apple (NASDAQ:<a href="https://investorplace.com/stock-quotes/aapl-stock-quote/">AAPL</a>) have largely aided infrastructure companies. Nvidia (NASDAQ:<a href="https://investorplace.com/stock-quotes/nvda-stock-quote/">NVDA</a>) clearly succeeds as a manufacturer of the crucial chips powering AI. And, Super Micro Computer (NASDAQ:<a href="https://investorplace.com/stock-quotes/smci-stock-quote/">SMCI</a>) sees rising business from hardware sales. Yet, according to Goldman Sachs, the data center stocks sector is expected to see the highest growth among all capital goods markets this year and through 2027. The bank forecasts a compound annual growth rate (CAGR) of 24% for data centers over the next three years.



As demand for AI surges, three data center stocks are well positioned for potentially exponential growth, with a solid focus on growing sales.



<h2>GDS Holdings (GDS)</h2>



<div><img width="300" height="169" src="https://investorplace.com/wp-content/uploads/2022/02/big-data-visual-300x169.png" alt="An image of different overlaid data charts"><div>Source: solarseven/Shutterstock</div></div>Hong Kong-based GDS Holdings (NASDAQ:<a href="https://investorplace.com/stock-quotes/gds-stock-quote/">GDS</a>) develops and operates data centers in China and Southeast Asia. It is actively expanding its international footprint, so this could offer <a href="https://www.benzinga.com/markets/penny-stocks/24/03/37628266/gds-preparing-to-spin-off-its-global-business">higher growth potential</a> than its domestic market. The company has rapidly expanded its infrastructure capacity. The total area committed and pre-committed by customers rose by 5.4% year-over-year (YOY). Also, the area in service increased by 12.5% YOY.



While sales increased 9.1% in the prior year and customer commitments grew, the company is not yet profitable. However, it heavily <a href="https://investors.gds-services.com/system/files-encrypted/nasdaq_kms/assets/2024/05/22/4-32-53/GDS%201Q24%20ER%200518%201430.pdf">invests in building new facilities</a> to meet demand and reduce backlogs. This strategy is <a href="https://global.chinadaily.com.cn/a/202308/23/WS64e5b34fa31035260b81dc9f.html#:~:text=China's%20investment%20in%20artificial%20intelligence,its%20capability%20in%20artificial%20industries.">well-aligned with Chinese government support</a> for the tech and AI sectors, areas driving the growth of data center stocks. The company remains undervalued relative to its potential. Its <a href="https://finance.yahoo.com/quote/GDS/">$8.09 billion enterprise value</a> significantly exceeds its $2.15 billion market cap. This disparity helps explain analysts&rsquo; optimism, with all recent ratings recommending GDS stock as a buy. On average, price targets point to a 45% upside over the near term to $14.89 per share.



<h2>Vertiv (VRT)</h2>



<div><img width="300" height="169" src="https://investorplace.com/wp-content/uploads/2019/07/data1600b-300x169.jpg" alt="Abstract Futuristic infographic with Visual data complexity , represent Big data concept, node base programming. storage stocks"><div>Source: Shutterstock</div></div>Vertiv (NASDAQ:<a href="https://investorplace.com/stock-quotes/vrt-stock-quote/">VRT</a>) provides critical digital infrastructure solutions as demand for data centers grows. The company designs and manufactures essential power management and cooling systems crucial for heat management. This includes advanced liquid cooling technologies that are becoming more prevalent as AI scales.



Strategic investments in areas like AI and high-performance computing are expected to drive long-term demand for Vertiv. <a href="https://www.investopedia.com/data-center-software-spending-ai-8678734">Data center spending is also growing</a> substantially to support more digital services and complex data processing, which are integral to Vertiv&rsquo;s business.



Vertiv has shown solid growth and execution. In its recent second quarter, the company posted <a href="https://d18rn0p25nwr6d.cloudfront.net/CIK-0001674101/5ec62428-4b74-46eb-9206-52efd20aa904.pdf">EPS growth of 114.1%</a> YOY and reported 12.6% revenue growth YOY. In addition, it<a href="https://www.investing.com/news/stock-market-news/vertiv-gains-on-q2-earnings-beat-and-raised-fy2024-outlook-432SI-3533033"> raised its full-year outlook</a> on strong demand and operations. The company has seen a 60% YOY increase in organic orders, largely from AI deployments.



With a record-high order backlog indicating future potential, Vertiv is well-positioned for continued growth. Analysts project an average price target of $105.37 per share, suggesting a<a href="https://finance.yahoo.com/quote/VRT/"> 55% potential upside</a> from current levels. This follows a 90% gain over the past year while it still trades 38% below its peak of $110 per share.



<h2>Silicon Motion Techn ADR (SIMO)</h2>



<div><img width="300" height="169" src="https://investorplace.com/wp-content/uploads/2022/05/shutterstock_1943518807-300x169.png" alt="SIMO stock: Silicon Motion Technology logo on the side of its headquarters"><div>Source: Michael Vi / Shutterstock</div></div>Silicon Motion (NASDAQ:<a href="https://investorplace.com/stock-quotes/simo-stock-quote/">SIMO</a>) manufactures solid-state memory drives that are key components used in data centers and other applications. The company expects its<a href="https://www.investing.com/news/stock-market-news/earnings-call-silicon-motion-sees-strong-start-to-2024-expects-growth-93CH-3554240"> sales growth to be in the range of 25-30%</a> this year. Recently, SIMO reported second-quarter earnings that showed a 15% sequential increase in quarterly revenue.



Showing consistent revenue growth, Silicon Motion driven by strong demand for its NAND flash controllers and SSD solutions. For the full year 2024, it expects <a href="https://seekingalpha.com/news/4099311-silicon-motion-technology-non-gaap-eps-of-0_64-beats-0_07-revenue-of-189_31m-beats-8_97m">revenue between $800 million and $830 million</a>, representing a 25% to 30% YOY increase. However, growth may be slightly delayed as the company implements new controller technology, after which it forecasts sales will return to increasing. SIMO stock trades at a <a href="https://worldperatio.com/sector/sp-500-information-technology/">relatively modest price-to-earnings</a> (P/E) ratio of 26.6 times compared to the sector average of 34.1 times. Analysts believe SIMO stock has strong future prospects, with 11 out of 14 recommending buying it. The average analyst price target is $93.89 per share, implying a <a href="https://finance.yahoo.com/quote/SIMO/analysis/">potential upside of as much as 58</a>%.&#8203;



On the date of publication, Stavros Tousios did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com <a href="https://investorplace.com/corporate/investorplace-publishing-guidelines/">Publishing Guidelines</a>.



On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
<div>Stavros Tousios, MBA, is the founder and chief analyst at Markets Untold. With expertise in FX, macros, equity analysis, and investment advisory, Stavros delivers investors strategic guidance and valuable insights.</div><h3>More From InvestorPlace</h3>
		<ul><li>
						<a href="https://investorplace.com/2024/04/legendary-investor-predicts-forget-a-i-this-technology-is-the-future/?cid=MKT794457&amp;eid=MKT802109">Legendary Investor Predicts: &ldquo;Forget AI... THIS Technology Is the Future&rdquo;</a>
					</li>
									</ul>
The post <a href="https://investorplace.com/2024/08/3-data-center-stocks-poised-to-grow-10x-as-ai-demand-surges/">3 Data Center Stocks Poised to Grow 10X as AI Demand Surges</a> appeared first on <a href="https://investorplace.com">InvestorPlace</a>.

3 Data Center Stocks Poised to Grow 10X as AI Demand Surges

The semiconductor industry is on the rise owing to the increasing demand, technological progress, and government investments. Thus, investing in fundamentally sound semiconductor stocks Qorvo (QRVO), Silicon Motion (SIMO), and Cirrus Logic (CRUS) could offer promising growth opportunities. Read more to find out… The global semiconductor industry is growing with rising electronics use and integration across applications such as networking communication devices, data processing, industrial automation, consumer electronics, automotive, and government projects. Increasing global consumer electronics consumption is further supporting the growth.
Amid this backdrop, it could be wise to invest in fundamentally robust semiconductor stocks Qorvo, Inc. (<a href="https://stocknews.com/stock/QRVO/">QRVO</a>), Silicon Motion Technology Corporation (<a href="https://stocknews.com/stock/SIMO/">SIMO</a>), and Cirrus Logic, Inc. (<a href="https://stocknews.com/stock/CRUS/">CRUS</a>) to thrive in the expanding semiconductor landscape.
The semiconductor industry is experiencing rapid expansion owing to technological transformations across sectors. Key technologies such as Artificial intelligence (AI), machine learning, cloud computing, 5G networks, autonomous vehicles, and big data analytics that rely heavily on semiconductor components are driving the industry growth.
Government initiatives are further boosting the sector's growth prospects. One such move includes <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/09/fact-sheet-chips-and-science-act-will-lower-costs-create-jobs-strengthen-supply-chains-and-counter-china/">the CHIPS and Science Act</a>, which aims to strengthen U.S. semiconductor manufacturing, boost domestic production, and reduce supply chain vulnerabilities by investing in American chip-making capabilities.
That being said, the Semiconductor Industry Association (SIA) reported that global semiconductor industry sales totaled <a href="https://www.semiconductors.org/global-semiconductor-sales-increase-18-3-in-q2-2024-compared-to-q2-2023-quarter-to-quarter-sales-up-6-5/">$149.9 billion</a> during the second quarter of 2024, an 18.3% increase compared to the second quarter of 2023. Sales in June 2024 were $50.0 billion, a 1.7% increase compared to May 2024.
Looking ahead to 2025, the World Semiconductor Trade Statistics (WSTS) forecasts <a href="https://www.wsts.org/esraCMS/extension/media/f/WST/6558/WSTS_FC-Release-2024_05.pdf">a 12.5% growth</a> in the global semiconductor market, reaching an estimated valuation of $687 billion. This growth is expected primarily by the Memory and Logic sectors, with significant increases projected.
The Memory sector is forecasted to exceed $200 billion, representing an upward trend of over 25%, while the Logic sector is expected to surpass $200 billion, marking a growth of over 10%.
Considering these positive trends, let's analyze the fundamentals of three solid <a href="https://stocknews.com/category/semiconductor-wireless-chip/">Semiconductor &amp; Wireless Chip</a> stocks, beginning with #3.
Stock #3: Qorvo, Inc. (<a href="https://stocknews.com/stock/QRVO/">QRVO</a>)
QRVO develops and markets technologies and products for global wireless, wired, and power markets. Its segments include High Performance Analog; Connectivity and Sensors Group; and Advanced Cellular Group. The company serves numerous sectors, such as consumer electronics, smart home/IoT, automotive, EVs, and more.
On January 31, QRVO <a href="https://ir.qorvo.com/news-releases/news-release-details/qorvor-acquire-anokiwave">announced an agreement</a> to acquire Anokiwave, a leading supplier of high-performance silicon integrated circuits (ICs) for intelligent, active array antennas in defense and aerospace (D&amp;A), SATCOM, and 5G applications.
Anokiwave's high-frequency beamforming and intermediate frequency (IF) to RF conversion ICs could strongly complement QRVO's RF front-end portfolio.
Over the past five years, QRVO's revenue increased at a CAGR of 4.8%. Its EBIT and total assets rose at a CAGR of 2% and 1.7%, respectively. Moreover, the company's normalized net income rose at a 2.8% CAGR over the same time frame.
For the fiscal 2025 first quarter that ended June 29, 2024, QRVO's revenue rose 36.2% year-over-year to $886.67 million. Its non-GAAP <a href="https://www.investopedia.com/terms/o/operatingincome.asp">operating income</a> increased 110.1% from the prior-year quarter to $98.13 million.
Likewise, the company's non-GAAP net income amounted to $83.52 million and $0.87 per share, up 148.7% and 155.9% year-over-year, respectively.
For the fiscal year ending March 2025, Street expects QRVO's revenue to increase 4.5% year-over-year to $3.94 billion. Plus, the company has topped the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
Shares of QRVO have gained 7.1% over the past three months and 16.9% over the past nine months to close the last trading session at $103.02.
QRVO's bright prospects are reflected in its <a href="https://stocknews.com/powr-ratings/">POWR Ratings</a>. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated considering 118 different factors, each weighted optimally.
QRVO has a B grade in Growth, Sentiment, and Quality. Within the <a href="https://stocknews.com/category/semiconductor-wireless-chip/">Semiconductor &amp; Wireless Chip</a> industry, QRVO is ranked #15 out of 90 stocks.
<a href="https://stocknews.com/stock/QRVO/">Click here</a> to see QRVO's rating for Value, Momentum, and Stability.
Stock #2: Silicon Motion Technology Corporation (<a href="https://stocknews.com/stock/SIMO/">SIMO</a>)
Headquartered in Hong Kong, SIMO provides negative-AND flash controllers for solid-state drives and other storage devices. It specializes in designing low-power semiconductor solutions for OEMs and mobile storage customers. The company's products are utilized in smartphones, tablets, and other electronic devices.
On August 5, SIMO announced the release of the world's first <a href="https://siliconmotiontechnologycorporation.gcs-web.com/news-releases/news-release-details/silicon-motion-launches-best-performancewatt-pcie-gen5-ssd">PCIe Gen5 client SSD controller</a> using Taiwan Semiconductor Manufacturing Company Limited's (<a href="https://stocknews.com/stock/TSM/">TSM</a>) 6nm EUV process, SM2508, the best power efficiency PCIe Gen5 NVMe 2.0 client SSD controller for AI PCs and gaming consoles that offer a 50% reduction in power consumption compared to competitive offerings in the 12nm process.
The new PCIe Gen5 SSD controller will meet the unique demands of AI-capable PCs, delivering exceptional performance and power efficiency. This advancement ensures that SIMO stays ahead of evolving AI PC standards, positioning the company as a leader in high-performance and energy-efficient technology solutions for the future.
On June 3, SIMO launched the <a href="https://siliconmotiontechnologycorporation.gcs-web.com/news-releases/news-release-details/silicon-motion-unveils-new-usb-display-interface-soc-enabling">SM770 USB display</a> interface SoC for USB docking stations to simplify connectivity for multiple 4K Ultra-High-Definition Displays with low latency and low power consumption.
The advancement would enable the creation of high-value USB display docking stations and adapters, addressing the demanding needs of today's professional environments and solidifying SIMO's market position.
Over the past five years, SIMO's revenue increased at a CAGR of 11.2%. Its EBITDA and total assets rose at a CAGR of 3.6% and 8.2%, respectively. Moreover, the company's normalized net income and EPS grew at a CAGR of 4% and 1.2%, respectively, over the same period.
During the fiscal 2024 second quarter that ended June 30, 2024, SIMO's net sales increased 50.1% year-over-year to $210.67 million. Its non-GAAP gross profit grew 62.2% from the year-ago value to $96.84 million. Additionally, the company's non-GAAP operating profit of $34.71 million indicates growth of 197.1% year-over-year.
Furthermore, the company's non-GAAP net income and non-GAAP earnings per ADS were $32.46 million and $0.96, up 157.9% and 152.6% from the prior year's quarter, respectively.
Street expects SIMO's revenue and EPS for the third quarter (ending September 2024) to grow 21.7% and 35.6% year-over-year to $209.77 million and $0.85, respectively. Furthermore, the company has surpassed the consensus revenue and EPS estimates in all four trailing quarters, which is remarkable.
Shares of SIMO have gained 3.1% over the past nine months to close the last trading session at $57.51.
SIMO's robust fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.
SIMO has a B grade for Growth and Value. It is ranked #8 among 90 stocks in the Semiconductor &amp; Wireless Chip industry.
To access SIMO's ratings for Quality, Stability, Sentiment, and Momentum, <a href="https://stocknews.com/stock/SIMO/">click here</a>.
Stock #1: Cirrus Logic, Inc. (<a href="https://stocknews.com/stock/CRUS/">CRUS</a>)
CRUS offers low-power, high-precision mixed-signal processing solutions for audio and high-performance mixed-signal applications. Its products include amplifiers, codecs, and digital signal processors. In addition, the company's SoundClear technology features tools, software, and algorithms that enhance user experience.
On June 25, CRUS announced the latest devices in its <a href="https://investor.cirrus.com/news-and-events/investor-news/news-details/2024/Cirrus-Logic-Unveils-Its-Latest-Additions-to-Its-Family-of-Professional-Audio-Converters/default.aspx">Pro Audio product family</a>: a series of digital-to-analog converters (DACs) and an ultra-high-performance audio CODEC. These solutions cater to recording artists, live performers, and audiophiles, providing transparent audio converters for seamless recording and playback.
With these flagship products, CRUS aims to set a gold standard in the audio electronics market. The advanced DACs and audio CODEC demonstrate the company's commitment to delivering superior audio quality, solidifying its reputation as a high-performance audio technology industry leader.
On February 5, CRUS <a href="https://investor.cirrus.com/news-and-events/investor-news/news-details/2024/Cirrus-Logic-Intel-and-Microsoft-Announce-Latest-Reference-Design-to-Enable-Cool-Quiet-and-High-Performance-PCs/default.aspx">entered a collaboration</a> with Intel Corporation (<a href="https://stocknews.com/stock/INTC/">INTC</a>) and Microsoft Corporation (<a href="https://stocknews.com/stock/MSFT/">MSFT</a>) on a new PC reference design to feature CRUS' high-performance audio and power technologies and INTC's forthcoming client processor, codenamed Lunar Lake.
The collaboration aims to reduce heating, extend battery life, and enable smaller, thinner PC designs. By integrating CRUS's advanced technologies with INTC's and MSFT's innovations, the partnership is set to revolutionize the PC industry, positioning CRUS at the forefront of cutting-edge PC design and performance.
CRUS' revenue has grown at a CAGR of 8.6% over the past five years. The company's net income and EPS improved at CAGRs of 25% and 27.4% over the same period. Further, the company's EBITDA grew at a CAGR of 17.5% over the same time frame.
For the fiscal 2025 first quarter, which ended on June 29, 2024, CRUS reported net sales of $374.03 million, increasing 18% year-over-year. Its income from operations grew 163% from the year-ago value to $46.79 million.
In addition, the company's non-GAAP net income and non-GAAP EPS were $62.37 million and $1.12, respectively, indicating growth of 64% and 67.2% from the prior year's quarter.
CRUS' shares have gained 47% over the past six months and 35.6% over the past year to close the last trading session at $115.31.
CRUS' sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
The stock has a B grade for Growth, Value, Quality, and Sentiment. CRUS is ranked #2 within the same industry among the 90 stocks.
In addition to the POWR Ratings we've stated above, we also have CRUS ratings for Stability and Momentum. Get all CRUS ratings <a href="https://stocknews.com/stock/CRUS/">here</a>.
What To Do Next?
Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today's volatile markets:
<a href="https://report.stocknews.com/free-report/3stocks/?formplacement=artbotad_3s">3 Stocks to DOUBLE This Year &gt;</a>

<hr />
QRVO shares rose $3.08 (+2.99%) in premarket trading Wednesday. Year-to-date, QRVO has declined -8.52%, versus a 10.55% rise in the benchmark S&amp;P 500 index during the same period.
<hr><div style="clear:both;"></div> <h2>About the Author: Aanchal Sugandh</h2> <img src='https:/wp-content/uploads/2022/12/Aanchal-Sugandh_Headshot.jpg' style="float:left; padding:5px;width:125px;">Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program.

She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.<a href="https://stocknews.com/authors/?author=aanchal-sugandh">More...</a>The post <a href=https://stocknews.com/news/qrvo-crus-simo-msft-tsm-intc-3-high-growth-semiconductor-stocks-to-buy-in-august/>3 High-Growth Semiconductor Stocks to Buy in August</a> appeared first on <a href=https://stocknews.com/>StockNews.com</a>

3 High-Growth Semiconductor Stocks to Buy in August

Silicon Motion: Now Attractively Valued Amid Strong Q2 Results (Rating Upgrade)

After a solid second-quarter performance, Silicon Motion Technology (SIMO) is poised for continued growth and profitability, driven by the ongoing strength of its expanding NAND OEM business and strategic product innovations. Amid surging competition and economic uncertainty, let's find out if it's ideal to add SIMO to your watchlist for its recovery potential. Read more... Silicon Motion Technology Corporation (<a href="https://stocknews.com/stock/SIMO/">SIMO</a>) is a prominent global provider of semiconductor solutions. Based in Hong Kong, the company specializes in developing NAND flash controllers for solid-state storage devices. It also offers SSD controllers for servers, PCs, and other client devices and is the leading supplier of eMMC and UFS embedded storage controllers.
SIMO's business performed well in the second quarter of 2024, with revenue exceeding the high end of its guided range and gross margins at the high end of its expectations. The company reported <a href="https://siliconmotiontechnologycorporation.gcs-web.com/news-releases/news-release-details/silicon-motion-announces-results-period-ended-june-30-2024">second-quarter net sales of $210.67 million</a>, surpassing the analysts' estimate of $209 million.
The company's SSD controller sales for the second quarter grew 25% to 30% year-over-year. Moreover, its eMMC=UFS controller sales rose 190% to 195% year-over-year, and its SSD solutions sales increased 20% to 25% quarter-over-quarter. Silicon Motion's non-GAAP gross margin was $46%. It posted an EPS per ADS of $0.96, compared to the consensus estimate of $0.95.
Wallace Kou, President and CEO of Silicon Motion, said, "Our SSD controller revenue increased for the fifth consecutive quarter and strength from our eMMC and UFS business accelerated as smartphone OEMs build in anticipation for a seasonally stronger second half and modest handset industry growth this year.
"The first half of the year was a strong start to 2024, and we remain confident that our increasing share with flash makers and expanding product portfolio will continue to grow our business and profitability throughout this year," he added.
For the third quarter of 2024, the management expects revenue in the range of $205-$216 million, up 19% to 25% year-over-year. Silicon Motion is expected to report a non-GAAP gross margin for the quarter of 46% to 47% and a non-GAAP operating margin of 14.3% to 15.3%.
Shares of SIMO have gained 3.1% over the past five days to close the last trading session at $60.61.
Let's look at factors that could influence SIMO's performance in the upcoming months.
Recent Strategic Developments
On August 7, SIMO launched the SM2508, the most power-efficient PCIe Gen5 NVMe 2.0 client SSD controller designed for AI PCs and gaming consoles. As the world's first PCIe Gen5 client SSD controller built using TSMC's 6nm EUV process, it delivers a 50% reduction in power consumption compared to competitors using the 12nm process.
Several leading SSD manufacturers, including major NAND suppliers are designing the SM2508. Production of the SM2508 is slated to ramp up in the fourth quarter of this year.
In May, Silicon Motion introduced the SM2322, the industry's fastest single-chip solution for high-performance, low-power, and cost-effective solution for external portable SSDs. It supports up to 8TB of storage and delivers exceptional data transfer rates of 20Gbps for managing large volumes of content from AI smartphones, multimedia devices, and game consoles.
"The new SM2322 now sets the bar even higher, introducing enhancements to support the higher speed USB3.2 specifications and providing greater capacity, catering to the needs of the AI era for large-scale digital media content storage and access," said Nelson Duann, Senior VP of Client &amp; Automotive Storage Business at Silicon Motion
Robust Financials
For the second quarter that ended June 30, 2024, SIMO's net sales increased 50.1% year-over-year to $210.67 million. Its non-GAAP <a href="https://www.investopedia.com/terms/g/grossprofit.asp#:~:text=Gross%20profit%2C%20or%20gross%20income,fluctuate%20compared%20to%20production%20output.">gross profit</a> grew 62.2% from the year-ago value to $96.84 million. Its non-GAAP operating profit was $34.71 million, an increase of 197.1% year-over-year.
Furthermore, the company reported second-quarter non-GAAP net income and non-GAP earnings per ADS of $32.46 million, or $0.96 per share, up 157.9% and 152.6% from the prior year's period, respectively. Silicon Motion's cash and cash equivalents were $289.18 million as of June 30, 2024, compared to $249.83 million as of June 30, 2023.
Favorable Analyst Estimates
Analysts expect SIMO's revenue for the third quarter (ending September 2024) to grow 21.7% year-over-year to $209.77 million. The consensus EPS estimate of $0.85 for the ongoing quarter indicates an improvement of 35.6% year-over-year. Moreover, the company has topped consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
For the fiscal year ending December 2024, Street expects SIMO's revenue and EPS to increase 28.2% and 53.2% from the previous year to $819.38 million and $3.48, respectively. The company's revenue and EPS for the fiscal year 2025 are expected to grow 9.8% and 36.3% year-over-year to $899.49 million and $4.74, respectively.
Low Valuation
In terms of forward non-GAAP P/E, SIMO is trading at 17.43x, 23.8% lower than the industry average of 22.87x. Similarly, the stock's forward EV/Sales of 2.14x is 21% lower than the industry average of 2.71x. Also, its forward EV/EBITDA of 11.80x is 13.1% lower than the industry average of 13.58x.
Moreover, the stock's forward Price/Sales and Price/Book multiples of 2.49 and 2.53 are favorably compared to the industry averages of 2.78 and 3.92, respectively. Its trailing-12-month Price/Cash Flow of 15.08x, 17.6% lower than the industry average of 18.29x.
POWR Ratings Reflect Promise
SIMO's robust fundamentals are reflected in its <a href="https://stocknews.com/powr-ratings/">POWR Ratings</a>. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. SIMO has a B grade for Growth, consistent with its robust financial performance in the last reported quarter. Further, the stock has a B grade for Value, in sync with its lower-than-industry valuation.
Within the <a href="https://stocknews.com/category/semiconductor-wireless-chip/">Semiconductor &amp; Wireless Chip</a> industry, SIMO is ranked #8 out of 90 stocks.
Beyond what I have stated above, we have also given SIMO grades for Quality, Momentum, Sentiment, and Stability. Get all SIMO ratings <a href="https://stocknews.com/stock/SIMO/">here</a>.
Bottom Line
SIMO's second-quarter results demonstrated significant business growth, with revenues and EPS surpassing analysts' estimates. Silicon Motion's SSD controller revenue surged for the first consecutive quarter, with significant strength from its eMMC and UFS business.
After a solid first half of 2024, the company seems positioned to grow its business and profitability throughout the remaining year by increasing its share with flash makers and expanding its product portfolio. Given its robust financials, optimistic analyst estimates, and low valuation, SIMO could be an ideal buy for substantial gains.
How Does Silicon Motion Technology Corporation (SIMO) Stack Up Against Its Peers?
While SIMO has an overall POWR Rating of B, investors could also check out these other stocks within the <a href="https://stocknews.com/category/semiconductor-wireless-chip/">Semiconductor &amp; Wireless Chip</a> industry with B (Buy) or B (Buy) ratings: Qualcomm Inc. (<a href="https://stocknews.com/stock/QCOM/">QCOM</a>), United Microelectronics Corp. (<a href="https://stocknews.com/stock/UMC/">UMC</a>), and Cirrus Logic, Inc. (<a href="https://stocknews.com/stock/CRUS/">CRUS</a>).
To explore more A or B-rated chip stocks, <a href="https://stocknews.com/category/semiconductor-wireless-chip/">click here</a>.
What To Do Next?
Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these "death trap" stocks are lurking in your portfolio:
<a href="https://report.stocknews.com/free-report/10-stocks-to-sell/?formplacement=artbotad_10sell">10 Stocks to SELL NOW! &gt;</a> 

<hr />
SIMO shares were trading at $59.68 per share on Friday morning, down $0.93 (-1.53%). Year-to-date, SIMO has declined -0.42%, versus a 12.39% rise in the benchmark S&amp;P 500 index during the same period.
<hr><div style="clear:both;"></div> <h2>About the Author: Mangeet Kaur Bouns</h2> <img src='https:/wp-content/uploads/2022/01/Mangeet-Kaur-Bouns_Image-4.jpg' style="float:left; padding:5px;width:125px;">Mangeet's keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet's looks to help retail investors understand the underlying factors before making investment decisions.<a href="https://stocknews.com/authors/?author=mangeet-kaurbouns">More...</a>The post <a href=https://stocknews.com/news/simo-qcom-umc-crus-should-you-watch-silicon-motion-technology-simo-for-its-recovery/>Should You Watch Silicon Motion Technology (SIMO) for Its Recovery Potential?</a> appeared first on <a href=https://stocknews.com/>StockNews.com</a>

Should You Watch Silicon Motion Technology (SIMO) for Its Recovery Potential?

Invesco Small Cap Value Fund Q2 2024 Review

Silicon Motion receives double downgrade due to low-growth outlook: BofA

Silicon Motion (SIMO) has released an update. Silicon Motion, Inc. has established the Employee Welfare Savings Association to facilitate long-term...

Silicon Motion Launches Employee Savings Plan

ATGE

AVTR

COHR

DAVA

EPAM

EXPE

HXSCF

LITE

MSFT

SSNLF

Management

Press Releases

Silicon Motion Announces Chief Financial Officer Transition

Dividends

Silicon Motion Confirms Quarterly Dividend

Silicon Motion Announces Results for the Period Ended March 31, 2024

Silicon Motion Unveils Next-Generation Ultra-Fast, Single-Chip Controller for High-Density Portable SSDs, Ideally Suited for Next-Generation AI Smart Devices and Gaming Consoles

Silicon Motion Unveils New USB Display Interface SoC Enabling Cost-Effective Universal Docking Stations with Support for Multiple Ultra-High Definition Displays.

Silicon Motion Expands Management Team with the Additions of Dr. Jen-Tai Hsu as Vice President of Algorithm & Technology, Mr. Tao Cheng as Vice President of Manufacturing Operations and Mr. Tom Sepenzis as Senior Director of IR & Strategy

Silicon Motion Announces Preliminary Second Quarter 2024 Revenue and Earnings Conference Call Details

Silicon Motion Announces Results for the Period Ended June 30, 2024

Silicon Motion Launches the Best Performance/Watt PCIe Gen5 SSD Controller at FMS 2024

Get Our Top Trade Ideas Delivered Daily - 65% Off Now

Get Our Top Trade Ideas Delivered Daily - 65% Off Now

Comments

Silicon Motion Technology

Silicon Motion Technology (SIMO) Forecast

Silicon Motion Technology (NASDAQ:SIMO) Stock, Quote.Headers.trade-ideas