Rambus (RMBS) AI Stock Analysis

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Rambus

(NASDAQ:RMBS)

77Outperform

Rambus presents a strong financial and operational profile, demonstrated by impressive revenue growth and strategic product introductions. The company's low leverage and high profitability margins bolster its financial stability. Technical indicators reflect current weaknesses, but the company's robust guidance and significant market potential in emerging technologies provide a positive outlook. Valuation appears reasonable, supporting an overall favorable score.

Positive Factors

Data Center and AI Growth

Rambus has over 75% revenue exposure to data centers with AI rapidly becoming a major component of growth.

Market Share Expansion

Rambus is expected to increase its market share in the Registered Clock Driver chip market to over 40% from 20%, and enter the RDIMM companion chip market targeting a 20% share.

Technological Leadership

Rambus is first to market with the industry-first complete memory interface chipset for Gen5 DDR5 RDIMM and next-generation MRDIMM, representing a significant TAM expansion opportunity.

Negative Factors

Licensing Revenue Decline

The guidance for 1Q25 indicates a 4% quarter-over-quarter decline, driven by lower Licensing Billings revenue.

Revenue Guidance

The guidance for 1Q25 indicates a 4% quarter-over-quarter decline, driven by lower Licensing Billings revenue.

Rambus (RMBS) vs. S&P 500 (SPY)

Market Cap

$4.91B

Dividend YieldN/A

Average Volume (3M)1.02M

Price to Earnings (P/E)27.6

Beta (1Y)2.20

Revenue Growth20.71%

EPS Growth-45.51%

CountryUS

Employees712

SectorTechnology

Sector Strength45

IndustrySemiconductors

Share Statistics

EPS (TTM)1.65

Shares Outstanding107,445,880

10 Day Avg. Volume1,274,099

30 Day Avg. Volume1,021,070

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)10.89

Price to Cash Flow (P/CF)25.70

P/FCF Ratio28.90

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$71.00

Price Target Upside61.18% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering4

Rambus Business Overview & Revenue Model

Company DescriptionRambus Inc. provides semiconductor products in the United States, Taiwan, South Korea, Japan, Europe, Canada, Singapore, China, and internationally. The company offers DDR memory interface chips, including DDR5, DDR4 and DDR3 memory interface chips to module manufacturers and OEMs; silicon IP comprising, interface and security IP solutions that move and protect data in advanced applications; and physical interface and digital controller IP to offer industry-leading, integrated memory and interconnect subsystems. It also provides a portfolio of patents that covers memory architecture, high-speed serial links, and security products. The company markets its products and services through its direct sales force and distributors. Rambus Inc. was incorporated in 1990 and is headquartered in San Jose, California.

How the Company Makes MoneyRambus makes money primarily through the sale of semiconductor products and the licensing of its intellectual property (IP). Its revenue streams are centered around two main areas: product sales and licensing fees. The company manufactures and sells memory interface chips that are used in a variety of applications, including data centers and consumer electronics. Additionally, Rambus licenses its technology and patents to other semiconductor companies, generating revenue through royalties and licensing agreements. Key partnerships with leading technology firms and continuous innovation in high-speed data transfer and security solutions further contribute to the company’s earnings.

Rambus Financial Statement Overview

Summary

Rambus exhibits strong financial health with impressive revenue growth and high profitability margins. The company's low leverage and solid equity position further enhance its financial stability. While the return on equity could be improved, the overall trajectory is positive, supporting future growth and resilience.

Income Statement

Very Positive

Rambus has demonstrated strong revenue growth, with a 20.7% increase from 2023 to 2024. The company exhibits a robust gross profit margin of 80.2% and a net profit margin of 32.3% for 2024. The EBIT margin is also commendable at 32.9%. Notably, the net income has improved significantly compared to prior years, indicating enhanced profitability.

Balance Sheet

Positive

The balance sheet reflects a solid equity position, with a debt-to-equity ratio of 0.03, indicating low leverage. The equity ratio stands at 83.5%, showcasing a strong financial foundation. However, the return on equity (ROE) of 16.0% suggests room for improvement in generating returns from equity.

Cash Flow

Very Positive

Rambus exhibits a healthy cash flow position, with a 15.9% growth in free cash flow from 2023 to 2024. The operating cash flow to net income ratio is 1.28, indicating strong cash generation relative to profits. The free cash flow to net income ratio is 1.11, highlighting effective cash management and reinvestment capacity.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
556.62M	461.12M	454.79M	328.30M	242.75M
	Gross Profit
446.52M	357.69M	347.21M	257.91M	182.00M
	EBIT
183.01M	153.64M	76.94M	39.66M	-44.52M
	EBITDA
244.15M	241.09M	41.17M	76.43M	21.99M
	Net Income Common Stockholders
179.82M	333.90M	-14.31M	18.33M	-43.61M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
481.80M	425.84M	313.23M	485.61M	502.65M
	Total Assets
1.34B	1.26B	1.01B	1.23B	1.24B
	Total Debt
30.15M	30.71M	44.48M	198.78M	195.06M
	Net Debt
-69.62M	-64.06M	-80.85M	90.89M	58.91M
	Total Liabilities
222.44M	220.13M	233.30M	370.25M	338.76M
	Stockholders Equity
1.12B	1.04B	779.30M	862.40M	905.11M
Cash Flow		Free Cash Flow
199.90M	172.55M	209.91M	195.43M	155.73M
	Operating Cash Flow
230.60M	195.79M	230.39M	209.22M	185.46M
	Investing Cash Flow
-56.72M	-57.40M	151.98M	-115.66M	-90.39M
	Financing Cash Flow
-167.99M	-169.62M	-362.94M	-114.21M	-61.19M

Rambus Technical Analysis

Technical Analysis Sentiment

Negative

Last Price44.05

Price Trends

50DMA

54.77

Negative

100DMA

56.53

Negative

200DMA

52.14

Negative

Market Momentum

MACD

-2.71

Positive

RSI

38.21

Neutral

STOCH

37.93

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RMBS, the sentiment is Negative. The current price of 44.05 is below the 20-day moving average (MA) of 49.66, below the 50-day MA of 54.77, and below the 200-day MA of 52.14, indicating a bearish trend. The MACD of -2.71 indicates Positive momentum. The RSI at 38.21 is Neutral, neither overbought nor oversold. The STOCH value of 37.93 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RMBS.

Rambus Risk Analysis

Rambus disclosed 46 risk factors in its most recent earnings report. Rambus reported the most risks in the “Tech & Innovation” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Rambus Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NVMI	82 Outperform	$5.14B	30.75	21.90%	―	29.83%	33.42%
RMBS	77 Outperform	$4.91B	27.65	16.66%	―	20.71%	-45.51%
ONTO	73 Outperform	$5.62B	28.32	11.01%	―	21.01%	65.27%
Sector *	58 Neutral	$10.03B	10.00	-6.85%	3.09%	7.49%	-11.58%
LSCC	55 Neutral	$5.67B	93.21	8.71%	―	-30.90%	-76.39%
SLAB	52 Neutral	$2.94B	―	-16.69%	―	-25.29%	-449.44%
QRVO	52 Neutral	$5.38B	203.71	0.77%	―	9.51%	―

* Technology Sector Average

Performance Comparison

RMBS

Rambus

44.05

-10.68

-19.51%

LSCC

Lattice Semiconductor

41.76

-24.32

-36.80%

ONTO

Onto Innovation

112.15

-58.62

-34.33%

NVMI

Nova

172.87

10.09

6.20%

SLAB

Silicon Laboratories

90.43

-28.69

-24.08%

QRVO

Qorvo

58.20

-48.92

-45.67%

Rambus Earnings Call Summary

Earnings Call Date: Feb 3, 2025 | % Change Since: -27.01% | Next Earnings Date: Apr 28, 2025

Earnings Call Sentiment Positive

The earnings call reflects a strong performance for Rambus in 2024 with record revenues and significant strategic achievements, such as the patent extension with Micron and introduction of new products. The company has shown resilience and growth potential in the data center and AI markets. However, there are some concerns regarding dependency on future platform rollouts and low demand for older technology products.

Highlights

Record Product Revenue

Rambus delivered a record annual product revenue of $247 million, driven by strong performance in memory interface chips.

Strategic Patent Extension

Extended patent licensing agreement with Micron through 2029, strengthening long-term licensing foundation.

Cash Generation and Stock Repurchase

Generated $231 million in cash from operations, a new annual high, and repurchased $113 million of stock, retiring approximately 2.2 million shares.

Introduction of New Products

Introduced eight new chips in 2024, including DDR5 server PMIC and the industry's first complete chipset for DDR5 MRDIMMs.

Q4 Performance

Q4 revenue of $161.1 million exceeded the high end of expectations, with memory interface chips revenue up 11% sequentially and 37% year-over-year.

Lowlights

Challenges with DDR4 Demand

Continued low demand for DDR4 products despite declining inventory levels.

Dependency on Intel Platform

Future revenue growth significantly tied to the rollout and adoption of Intel's next-generation platform.

Company Guidance

During the Rambus Fourth Quarter and Fiscal Year 2024 Earnings Conference Call, the company provided robust guidance, highlighting several key metrics that underscore its strong financial and operational performance. Rambus achieved record annual product revenue of $247 million, driven by a 37% year-over-year increase in Q4 revenue from memory interface chips, totaling $73 million. The company also reported a new annual high for cash from operations at $231 million. Looking ahead to 2025, Rambus expects Q1 revenue to range between $156 million and $162 million, with royalty revenue projected between $56 million and $62 million and licensing billings between $59 million and $65 million. The company anticipates Q1 non-GAAP earnings per share between $0.51 and $0.59. Continued market share gains, particularly in DDR5 products, and the introduction of eight new chip products in 2024 are expected to drive further growth, with significant contributions from companion chips projected in the latter half of 2025.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.