Rambus (RMBS) AI Stock Analysis

• Market Cap: $9.49B
• Dividend Yield: N/A
• Average Volume (3M): 2.09M
• Price to Earnings (P/E): 41.8
• Beta (1Y): 2.15
• Revenue Growth: 31.05%
• EPS Growth: 30.35%
• Country: US
• Employees: 712
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): 0.63
• Shares Outstanding: 107,650,130
• 10 Day Avg. Volume: 1,977,327
• 30 Day Avg. Volume: 2,090,374
• PEG Ratio: -0.69
• Price to Book (P/B): 5.07
• Price to Sales (P/S): 10.20
• P/FCF Ratio: 28.41
• Enterprise Value/Market Cap: 1.13
• Enterprise Value/Revenue: 15.83
• Enterprise Value/Gross Profit: 20.90
• Enterprise Value/Ebitda: 35.26
• 1Y Price Target: $113.67
• Price Target Upside: 28.95% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 78 Outperform
• Price Target: $105.00 ▲(19.12% Upside)

Rambus's strong financial performance and positive earnings call sentiment are the primary drivers of its high score. While technical analysis presents mixed signals, the company's robust cash generation and strategic positioning in the AI market provide a solid foundation for future growth. The high valuation is a concern, but the overall outlook remains positive.

Positive Factors

Revenue Growth

The significant year-over-year revenue growth indicates strong market demand for Rambus's products, particularly in the memory interface chip business, which supports long-term financial stability and expansion.

Cash Generation

Strong cash generation enhances Rambus's ability to invest in growth opportunities, maintain financial flexibility, and support ongoing operations, contributing to its long-term financial health.

Market Leadership

Leadership in DDR5 products positions Rambus as a key player in the semiconductor industry, ensuring competitive advantage and continued revenue growth in a rapidly evolving market.

Negative Factors

New Product Contribution

The modest revenue contribution from new products suggests potential challenges in scaling these offerings, which could impact Rambus's ability to diversify income streams and achieve projected growth.

CXL Market Uncertainty

Uncertainty in the CXL market could delay revenue realization from this segment, affecting Rambus's growth projections and strategic positioning in emerging technology markets.

Valuation Concerns

A high P/E ratio suggests that the stock may be overvalued, which could limit upside potential and make it less attractive to value-focused investors, impacting long-term investment appeal.

Rambus Business Overview & Revenue Model

Company Description

Rambus Inc. is a technology company that specializes in memory and security solutions for various sectors, including computing, networking, and consumer electronics. Founded in 1990, Rambus has evolved from a provider of memory interface technologies to a leader in advanced semiconductor and security technologies. The company's core products include memory controllers, interface solutions, and hardware security technologies, which are pivotal in enhancing performance and security in data centers, cloud computing, and IoT devices.

How the Company Makes Money

Rambus generates revenue primarily through licensing its intellectual property, which includes patented technologies related to memory interfaces, cryptography, and security solutions. The company has established key partnerships with major semiconductor manufacturers and technology firms, allowing it to monetize its innovations through licensing agreements and royalties. Additionally, Rambus provides engineering services and custom solutions, contributing to its revenue streams. Significant collaboration with industry leaders in the semiconductor space further enhances its earnings potential, as these partnerships often lead to long-term contracts and recurring revenue.

Rambus Financial Statement Overview

Summary

Rambus exhibits strong financial health with consistent revenue growth and high profitability margins. The balance sheet is robust with low leverage, and cash flow generation is strong, supporting future growth. While operational efficiency could be improved, the overall financial position is solid, positioning the company well in the semiconductor industry.

Income Statement

Rambus has demonstrated strong revenue growth with a 5.11% increase in TTM, supported by a high gross profit margin of 79.99%. The net profit margin is robust at 33.72%, indicating effective cost management. However, the EBIT margin has decreased slightly compared to previous years, suggesting potential pressure on operational efficiency.

Balance Sheet

The company maintains a low debt-to-equity ratio of 0.02, reflecting strong financial stability. Return on equity is healthy at 19.08%, indicating efficient use of equity capital. The equity ratio is solid, suggesting a strong capital structure. However, the slight increase in debt levels over the years warrants monitoring.

Cash Flow

Rambus shows a positive free cash flow growth rate of 11.55% in TTM, indicating strong cash generation capabilities. The operating cash flow to net income ratio is high at 3.91, reflecting efficient cash conversion. The free cash flow to net income ratio is also strong at 0.90, suggesting good cash flow management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	678.49M	556.62M	461.12M	454.79M	328.30M	246.32M
Gross Profit	513.98M	419.91M	318.78M	314.02M	229.87M	154.74M
EBITDA	304.70M	239.27M	241.09M	41.17M	78.27M	21.99M
Net Income	228.82M	179.82M	333.90M	-14.31M	18.33M	-40.47M
Balance Sheet
Total Assets	1.41B	1.34B	1.26B	1.01B	1.23B	1.25B
Cash, Cash Equivalents and Short-Term Investments	673.30M	481.80M	425.84M	313.23M	485.61M	502.65M
Total Debt	26.44M	30.15M	30.71M	44.48M	198.78M	195.06M
Total Liabilities	117.87M	222.44M	220.13M	233.30M	370.25M	338.70M
Stockholders Equity	1.29B	1.12B	1.04B	779.30M	862.40M	912.71M
Cash Flow
Free Cash Flow	292.37M	199.90M	172.55M	209.91M	195.43M	155.73M
Operating Cash Flow	319.19M	230.60M	195.79M	230.39M	209.22M	185.46M
Investing Cash Flow	-301.18M	-56.72M	-57.40M	151.98M	-115.66M	-90.39M
Financing Cash Flow	-52.53M	-167.99M	-169.62M	-362.94M	-114.21M	-61.19M

Rambus Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 88.15
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RMBS, the sentiment is Neutral. The current price of 88.15 is below the 20-day moving average (MA) of 100.90, below the 50-day MA of 100.23, and above the 200-day MA of 70.64, indicating a neutral trend. The MACD of -2.99 indicates Positive momentum. The RSI at 40.56 is Neutral, neither overbought nor oversold. The STOCH value of 12.74 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for RMBS.

Rambus Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RMBS	78 Outperform	$9.49B	41.83	19.66%	―	31.05%	30.35%
NVMI	75 Outperform	$8.56B	36.81	23.58%	―	39.37%	40.87%
LSCC	72 Outperform	$9.20B	341.25	3.86%	―	-12.03%	-80.99%
SWKS	64 Neutral	$9.31B	20.35	7.89%	4.50%	-2.18%	-16.84%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
MTSI	61 Neutral	$11.86B	―	-4.42%	―	32.58%	-173.04%
QRVO	60 Neutral	$7.55B	35.28	6.30%	―	-7.22%	―

Rambus Corporate Events

Rambus Shines in Earnings Call with Record Growth

Rambus’ recent earnings call painted a picture of robust growth and optimism, despite some challenges. The company reported record product revenue growth and excellent cash generation, driven by positive market trends in AI. While supply chain constraints and dependency on partner rollouts for MRDIMM were noted, the overall sentiment was overwhelmingly positive, with the highlights significantly outweighing the lowlights.