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B. Riley set its price target for the chip designer at $310 on Thursday. This is significantly higher than where the stock currently trades, though it sits slightly below the $347 average target held by other analysts who follow the company. While the stock has seen some recent swings, this target suggests analysts see plenty of room for the price to rise as the company continues its shift into high-margin chips for AI data centers and cars.
Source: B.Riley Financial
After Silicon Motion reported its October results, we updated our fair value and cut our quality score to 4.1. We upgraded our rating to Buy and raised our expectations for how much profit the company keeps after making its products. We have added the $1.15 billion in new debt to what we track and increased our revenue growth projection for the automotive storage division. Our new projections also account for the shift in sales toward more expensive chips used in data centers.
The company saw a massive jump in sales, which rose more than 130 percent compared to the same time last year. This growth was led by its chips that manage high-speed data storage, which are seeing higher demand as data centers upgrade their hardware to handle AI workloads.
While sales of chips for mobile phones dipped slightly from last quarter, the company more than made up for it with its specialized storage solutions for servers. This shift toward server infrastructure is a key part of the business becoming more profitable, as those chips typically sell for higher prices than the ones used in consumer gadgets.
See the full quarter, and how our tracked metrics did
Source: Company earnings report
The company reports its latest results today. Analysts are looking for revenue of about 530 million dollars. We are watching for progress in the shift toward faster storage chips used in AI servers, which are more profitable than the chips used in mobile phones. This shift is the main reason to own the stock, as it moves the business away from low-cost gadgets and toward more valuable data center infrastructure.
New orders for key U.S. manufactured goods rose in September and shipments picked up speed. This suggests that businesses are still spending on equipment despite higher borrowing costs. For Silicon Motion, this is a helpful sign for the broader hardware market. The company makes the chips that manage data storage in computers and servers, so a steady pace of business investment usually supports demand for the storage drives its technology powers.
Source: Reuters
Management consistently sets a bar they can clear, but the business is currently outrunning even their own expectations as sales growth accelerates.
| Expectation | |
|---|---|
| EPS | $5.06 |
| Revenue | $604M |
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