Rambus (RMBS) AI Stock Analysis

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Rambus

(NASDAQ:RMBS)

Rating:83Outperform

Price Target:

$66.00

▲(14.92%Upside)

Rambus's strong financial performance and positive earnings call results are the most significant factors driving the score. The technical indicators support bullish momentum, while valuation metrics suggest moderate pricing. Potential risks from tariff impacts and Silicon IP revenue variability are noted but are outweighed by the company's strengths.

Positive Factors

Market Share Growth

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.

Product Expansion

The potential expansion of companion chips is considered a meaningful catalyst for Rambus, contributing to the positive sentiment for the stock.

Negative Factors

Revenue Guidance

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

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

Market Cap

$6.14B

Dividend YieldN/A

Average Volume (3M)1.04M

Price to Earnings (P/E)29.6

Beta (1Y)2.18

Revenue Growth30.13%

EPS Growth-42.27%

CountryUS

Employees712

SectorTechnology

Sector Strength83

IndustrySemiconductors

Share Statistics

EPS (TTM)0.67

Shares Outstanding107,411,920

10 Day Avg. Volume786,440

30 Day Avg. Volume1,037,366

Financial Highlights & Ratios

PEG Ratio1.69

Price to Book (P/B)4.72

Price to Sales (P/S)0.00

P/FCF Ratio23.49

Enterprise Value/Market Cap0.88

Enterprise Value/Revenue2.49

Enterprise Value/Gross Profit11.24

Enterprise Value/Ebitda5.18

Forecast

1Y Price Target

$70.75

Price Target Upside23.19% 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 generates revenue primarily through the licensing of its patented technologies and intellectual property to semiconductor companies and electronics manufacturers. The company earns money by charging licensing fees and royalties for the use of its technology in various products. In addition to licensing, Rambus sells semiconductor products, such as memory interface chips and security products, which contribute to its revenue streams. The company also engages in strategic partnerships and collaborations to expand its market reach and enhance its technological offerings, further bolstering its income through joint ventures and shared innovations.

Rambus Earnings Call Summary

Earnings Call Date:Apr 28, 2025

(Q1-2025)

% Change Since: 9.98%|

Next Earnings Date:Aug 04, 2025

Earnings Call Sentiment Positive

Rambus had a strong start to the fiscal year with record product revenue and positive advancements in their product roadmap, despite facing some uncertainties related to tariffs and variability in Silicon IP revenue. The company's stable patent licensing business and strategic investments position it well for long-term growth.

Q1-2025 Updates

Positive Updates

Record Product Revenue in Q1 2025

Rambus achieved record product revenue of $76 million, marking a 52% year-over-year increase, driven by strong performance in DDR5 RCD products.

Strong Financial Results

The company delivered revenue of $166.7 million, exceeding expectations, with a robust cash from operations of $77 million.

Advancement in Product Roadmap

Introduction of a record number of new products, including server PMICs and MRDIMM 12800 chipset, with ongoing qualifications at module and system levels.

Positive Momentum in Silicon IP

AI continues to drive design win momentum, with strong demand for memory and interconnect IP, including HBM4 and PCIe 7 controllers.

Stable and Predictable Patent Licensing Business

The patent licensing business remains highly predictable due to long-term agreements, providing financial stability amidst macroeconomic uncertainties.

Negative Updates

Limited Visibility on Tariff Impacts

While there is currently no direct impact from tariffs, the company faces uncertainty regarding potential indirect impacts on operations and supply chains.

Lumpy Nature of Silicon IP Revenue

Silicon IP revenue remains variable and dependent on customer program timing and design starts, leading to fluctuations in revenue.

Mid-Single Digit Price Erosion

The company experienced mid-single-digit price erosion on production parts, in line with expectations.

Delayed MRDIMM Revenue

Revenue from the MRDIMM 12800 chipset is not expected until the second half of 2026, dependent on the rollout of follow-on generation server platforms.

Company Guidance

During the Rambus First Quarter Fiscal Year 2025 Earnings Conference Call, the company exceeded its revenue and earnings expectations, generating a product revenue of $76 million, up 52% year-over-year, primarily driven by strong DDR5 RCD product sales. The company reported total revenue of $166.7 million, with royalty revenue of $74 million and licensing billings at $73.3 million. Rambus achieved an outstanding cash flow from operations of $77.4 million, contributing to an end-of-quarter cash, cash equivalents, and marketable securities totaling $514.4 million. Looking ahead to Q2, Rambus projects revenue between $167 million and $173 million, with non-GAAP earnings per share expected to range between $0.57 and $0.64. The company remains confident about its resilient business model, strong cash generation, and ongoing investments in product development, including its expanding portfolio of new products such as server PMICs and MRDIMM 12800 chipset, which are expected to drive future growth and maintain its market leadership position.

Rambus Financial Statement Overview

Summary

Rambus demonstrates strong financial health with impressive revenue growth, efficient cost management, and robust profitability. The balance sheet is stable with low leverage, and cash flow generation is strong, indicating a well-managed company poised for sustained growth.

Income Statement

Very Positive

Rambus has demonstrated strong revenue growth with a notable 32.8% increase from 2023 to 2024. The gross profit margin is robust at 79.0% for TTM, reflecting efficient cost management. Additionally, the net profit margin improved significantly to 34.2%, indicating enhanced profitability. The EBIT and EBITDA margins are solid at 35.7% and 42.5% respectively, showcasing operational efficiency and a strong earnings base.

Balance Sheet

Very Positive

The balance sheet of Rambus is healthy, with a debt-to-equity ratio of 0.03, indicating low leverage and financial stability. The return on equity has improved to 17.9%, demonstrating effective use of equity capital to generate profits. The equity ratio is strong at 84.1%, suggesting a solid capital structure with significant shareholder equity relative to total assets.

Cash Flow

Very Positive

Rambus has shown positive cash flow trends, with a 16.7% growth in free cash flow from 2023 to 2024, indicating strong cash generation capabilities. The operating cash flow to net income ratio is 1.30, reflecting a healthy cash conversion cycle and efficient operations. The free cash flow to net income ratio is also robust at 1.13, indicating that the company effectively converts its net earnings into cash.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
605.42M	556.62M	461.12M	454.79M	328.30M	242.75M
	Gross Profit
478.42M	446.52M	357.69M	347.21M	257.91M	182.00M
	EBIT
215.89M	183.01M	153.64M	76.94M	39.66M	-44.52M
	EBITDA
271.76M	239.27M	241.09M	41.17M	76.43M	21.99M
	Net Income Common Stockholders
207.23M	179.82M	333.90M	-14.31M	18.33M	-43.61M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
391.06M	481.80M	425.84M	313.23M	485.61M	502.65M
	Total Assets
1.21B	1.34B	1.26B	1.01B	1.23B	1.24B
	Total Debt
30.62M	30.15M	30.71M	44.48M	198.78M	195.06M
	Net Debt
-81.99M	-69.62M	-64.06M	-80.85M	90.89M	58.91M
	Total Liabilities
217.24M	222.44M	220.13M	233.30M	370.25M	338.76M
	Stockholders Equity
991.59M	1.12B	1.04B	779.30M	862.40M	905.11M
Cash Flow		Free Cash Flow
233.33M	199.90M	172.55M	209.91M	195.43M	155.73M
	Operating Cash Flow
268.89M	230.60M	195.79M	230.39M	209.22M	185.46M
	Investing Cash Flow
-136.46M	-56.72M	-57.40M	151.98M	-115.66M	-90.39M
	Financing Cash Flow
-112.40M	-167.99M	-169.62M	-362.94M	-114.21M	-61.19M

Rambus Technical Analysis

Technical Analysis Sentiment

Positive

Last Price57.43

Price Trends

50DMA

51.39

Positive

100DMA

55.41

Positive

200DMA

52.00

Positive

Market Momentum

MACD

1.28

Negative

RSI

61.33

Neutral

STOCH

85.00

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RMBS, the sentiment is Positive. The current price of 57.43 is above the 20-day moving average (MA) of 55.31, above the 50-day MA of 51.39, and above the 200-day MA of 52.00, indicating a bullish trend. The MACD of 1.28 indicates Negative momentum. The RSI at 61.33 is Neutral, neither overbought nor oversold. The STOCH value of 85.00 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RMBS	83 Outperform	$6.14B	29.61	19.26%	―	30.13%	-42.27%
NVMI	80 Outperform	$6.36B	32.94	23.87%	―	41.03%	51.42%
ONTO	74 Outperform	$4.70B	21.37	11.83%	―	21.23%	56.90%
QRVO	72 Outperform	$7.37B	132.83	1.60%	―	-1.34%	―
LSCC	67 Neutral	$6.55B	126.33	7.39%	―	-29.54%	-76.42%
SLAB	66 Neutral	$4.08B	―	-14.77%	―	2.16%	-55.38%
Sector *	62 Neutral	$11.72B	10.43	-7.10%	2.91%	7.41%	-7.94%

* Technology Sector Average

Performance Comparison

RMBS

Rambus

57.43

1.53

2.74%

LSCC

Lattice Semiconductor

48.02

-13.43

-21.86%

ONTO

Onto Innovation

96.10

-122.18

-55.97%

NVMI

Nova

217.00

-8.22

-3.65%

SLAB

Silicon Laboratories

126.60

8.03

6.77%

QRVO

Qorvo

78.58

-23.78

-23.23%

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.