1. Silicon Motion Technology Corporation (NASDAQ:SIMO)
Number of Hedge Fund Holders: 43
Market Capitalization as of October 10, 2024: $2.01 Billion
Silicon Motion Technology Corporation (NASDAQ:SIMO) ranks first on our list of the most promising small-cap stocks to buy according to hedge funds. The American-Taiwanese company is a supplier of NAND flash controllers for solid-state storage devices. Its customers include NAND flash makers, module makers, and hyperscalers. Some of its products include SSD controllers, mobile storage controllers, and expandable storage controllers such as flashcards and USB flash drives.
The company was founded in 1995 and now operates from offices in Hong Kong, Taiwan, and the United States. In the second quarter of 2024, the company generated revenue worth $210.7 million, up by 50% year-over-year. Revenue from SSD controllers grew by 30% year-over-year and increased for the fifth consecutive quarter.
During the year, Silicon Motion Technology Corporation (NASDAQ:SIMO) locked in new programs with flash makers. In addition to that, its new controllers for personal computers and mobile phones can deliver high performance and manage AI workloads.
In the first half of 2024, Silicon Motion Technology Corporation (NASDAQ:SIMO) reported strong financial results. As the company’s share of flash makers continues to increase and its product portfolio continues to expand, the company will report strong financial performance in the second half of 2024 and thereafter.
Ave Maria Growth Fund stated the following regarding Silicon Motion Technology Corporation (NASDAQ:SIMO) in its first quarter 2024 investor letter:
“Silicon Motion Technology Corporation (NASDAQ:SIMO) is a fabless semiconductor company that specializes in low-end flash memory controllers. Memory manufacturers often design their own controllers in-house, but the rising cost of developing a chip is making it increasingly beneficial to outsource the more commoditized low-end controller development to a third party like Silicon Motion. This outsourcing trend is set to move from consumer applications into the server end market, and Silicon Motion’s new enterprise controller is well positioned to capitalize on the growth.”
Overall, SIMO ranks first among the 10 most promising small-cap stocks according to hedge funds. While we acknowledge the potential of technology companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SIMO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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