Silicon Motion (simo) Surges 6.5%: Is This An Indication Of Further Gains?

Silicon Motion SIMO shares rallied 6.5% in the last trading session to close at $52.80. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 6.9% loss over the past four weeks.

Silicon Motion is steadily advancing its portfolio of SSD controller and storage solutions to support the next generation of AI-native industrial, automotive and data center applications. The company recently introduced a PCIe Gen4 automotive-grade SSD controller called SM2264XT-AT. The solution boasts eight NAND channels and supports speed up to 1,600 MT/s per channel. The controller effectively boosts the flexibility, scalability and reliability of automotive applications. The company introduced leading-edge storage solutions called FerriSSD, Ferri-eMMC, and Ferri-UFS to support various AI embedded systems including industrial automation and automotive AI use cases.

The company unveiled the MonTitan 128TB QLC SSD. With exceptional speed and throughput, the SSD is ideal for AI native data center applications. It also launched a high-performance display interface SoC (System on a Chip) that effectively supports up to three 4K ultra-HD displays for industrial and embedded systems applications. These innovative launches reflect management’s strategy of delivering strong, sustainable long-term growth by broadening the product portfolio, expanding into new markets and increasing the market share in the consumer, enterprise, automotive, industrial and commercial storage markets. These factors have instilled investor optimism, which probably propelled the share price appreciation.

This chip company is expected to post quarterly earnings of $0.44 per share in its upcoming report, which represents a year-over-year change of -31.3%. Revenues are expected to be $162.58 million, down 14.1% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Silicon Motion, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on SIMO going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Silicon Motion belongs to the Zacks Computer - Integrated Systems industry. Another stock from the same industry, IBM IBM, closed the last trading session 3.1% lower at $248.95. Over the past month, IBM has returned 3.1%.

For IBM, the consensus EPS estimate for the upcoming report has changed -1.7% over the past month to $1.43. This represents a change of -14.9% from what the company reported a year ago. IBM currently has a Zacks Rank of #2 (Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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