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On Friday, Loop Capital Markets maintained their positive stance on Rambus Inc . (NASDAQ:RMBS) shares, reiterating a Buy rating and a price target of $70.00. Currently trading at $56.82, InvestingPro analysis suggests the stock is slightly undervalued, with analyst targets ranging from $69 to $92. The affirmation came after Micron Technology (NASDAQ:MU)’s second quarter fiscal year 2025 results were released earlier in the day, which provided insights into the market dynamics affecting Rambus.
Micron Technology’s management presented a scenario with both opportunities and challenges for Rambus, emphasizing continued growth expectations in data center servers. This aligns with Rambus’s own impressive growth trajectory, with revenue increasing 20.71% over the last twelve months. This growth is anticipated to be at a mid-single-digit percentage rate, encompassing both AI and general servers, with the latter also projected to expand.
Despite the optimistic outlook for high-capacity server DRAM units and revenue, Micron Technology also cautioned about potential supply limitations. These constraints are specifically related to the types of memory to which Rambus is exposed due to manufacturing difficulties in meeting the demand for High Bandwidth (NASDAQ:BAND) Memory (HBM). It is important to note, however, that Rambus’s exposure is tied to high-capacity server DIMMs and not to HBM memory or server Low Power Double Data Rate 5 (LPDDR5).
Rambus, a prominent provider of industry-leading chips and silicon IP with an impressive 82.23% gross profit margin, is positioned within the semiconductor sector which continues to experience dynamic shifts. The company’s focus on high-capacity server DIMMs places it at the heart of data center growth, a critical area as the world increasingly relies on cloud computing and data processing. InvestingPro subscribers can access 13 additional key insights about Rambus’s market position and financial health.
The reaffirmation of the Buy rating and price target by Loop Capital Markets underscores their confidence in Rambus’s market position and growth prospects. The company maintains strong financial health with an excellent current ratio of 8.44 and minimal debt exposure. As the semiconductor industry grapples with supply chain issues, Rambus’s stock performance will likely continue to be influenced by broader market trends and specific developments within the memory segment. For detailed analysis and comprehensive valuation metrics, investors can access the full Pro Research Report on InvestingPro.
In other recent news, Rambus Inc. has reported record-setting financial performance, achieving all-time highs in total revenue, product revenue, profitability, and cash generation. This exceptional quarterly result has led Rosenblatt Securities to raise its price target for Rambus shares to $92, up from $85, while maintaining a Buy rating. Jefferies also increased its price target for Rambus, moving it from $55 to $69, and maintained a Buy rating, highlighting the company’s ongoing transition to DDR5 technology and the introduction of new products. Evercore ISI reiterated its Outperform rating on Rambus, keeping the price target at $71, reflecting confidence in the company’s growth potential.
Additionally, Rambus announced the launch of its new CryptoManager Security IP product line, featuring a multi-tiered architecture for enhanced data security. This new offering aims to address the growing need for security solutions in various sectors, including data centers and automotive industries. Analysts have expressed optimism about Rambus’s future, with Rosenblatt’s Kevin Cassidy projecting a 40% year-over-year growth in product revenue for 2025. The positive outlook is supported by anticipated demand for DRAM modules, driven by advancements in server CPUs from major tech companies like Intel (NASDAQ:INTC) and AMD (NASDAQ:AMD). These developments underscore Rambus’s strategic moves and potential for sustained growth in the technology sector.
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