GrowthTurtle
Data Science PhD & IEEE Fellow, Ex-Two Sigma
CEVA looks expensive against its sales at $31.27. The chip and software IP licensor trades at 6x sales and 5x next year's, while chipmakers usually get 2x. Fair value sits at $14.63 to $18.63, about 2x next year's sales, putting the stock 68% above the high end of that range. This is a valuation read only, based on reported earnings and revenue estimates. x.com
Arm's low blended royalties leave pricing and mix leverage that makes earnings look massively understated at 110x forward P/E. It collects about 7 cents per chip overall, versus $1 on compute and networking chips and $0.85-$0.90 on smartphones. An 8-cent bump to 15 cents per chip is a hypothetical $5-6 billion royalty-revenue scenario, which would be pure cash. Mix shift and price increases are coming, though royalties may not double. x.com x.com
Nordic Semiconductor, Ambiq Micro and CEVA look unattractive as edge AI silicon suppliers, with the full argument set out in a new Substack article. x.com
CEVA's post-earnings drop is a temporary sell-the-news reaction after beats on both revenue and earnings. Likely one or two large holders used the liquidity event to unload, much as TSMC sold off despite strong sales growth. Semiconductors are slightly weak across the board, and the AI trade should catch a second wind soon. x.com x.com
Arm's valuation carries an absurd premium for the architecture layer. It trades at 91.9x EV/sales, far above its historical range, as Wall Street prices it as the mandatory royalty tollbooth for every custom AI chip. EDA leaders Cadence, at 30.1x, and Synopsys, at 21.2x, trade near the low end of their historical bands, priced like mature utilities, as the market stacks almost all the scarcity premium into Arm. x.com
Arm is still expensive at about 40x revenue with only 20% growth, so it has not fallen enough. x.com
