10 Worst Performing Affordable Stocks Under $40

3. Rambus Inc. (NASDAQ:RMBS)

Share Price: $38.65

Analyst Upside Potential: 69.47%

Forward P/E Ratio: 20.09

Earnings Growth This Year: 10.10%

Number of Hedge Fund Holders: 21

Year-to-Date Decline: 40.77%

There is a mixed sentiment among investors for the semiconductor product company Rambus Inc. (NASDAQ:RMBS). The company offers DDR memory interface chips and DDR4 memory interface chips. It also engages in interface IP and security IP technologies.

The stock is trading at a lower forward price-to-earnings ratio of 20.09 while the market average is at around 24. Its share price took a hit and has been down more than 40% on a year-to-date basis, making Rambus Inc. (NASDAQ:RMBS) one of the worst performing affordable stocks under $40. The reason behind the stock going down was partly due to not meeting analysts’ expectations. The company delivered $132 million in revenue, which was up 10% year-over-year but fell short of the market consensus of $139 million. Another reason was a decrease in its net income which fell from nearly $169 million in Q2 2023 to $36 million in the second quarter.

While this is a bearish sentiment, analysts have high hopes for the company. 6 analysts have a consensus Buy opinion on the stock, with their 12-month median price target of $65.50 presenting a 69% upside from the current level. Investors are betting on  Rambus Inc.’s (NASDAQ:RMBS) new strategy to develop an industry-leading product roadmap for data centers and AI.

It has gained momentum in the Silicon IP design which is fueled by a product roadmap for data centers and AI. The company has introduced a family of PCIe 7 IP solutions for AI and HPC. Moreover, it is projecting double-digit growth for the fiscal third quarter with subsequent growth in its chip segment. It is also one of the 7 Best Debt Free Stocks To Buy.

Carillon Chartwell Small Cap Growth Fund stated the following regarding Rambus Inc. (NASDAQ:RMBS) in its first quarter 2024 investor letter:

“Rambus Inc. (NASDAQ:RMBS) shares lagged as the company disappointed investors with weak guidance for the first quarter of 2024, due to lower product revenues for the semiconductors it makes. Spending on traditional servers has been lower, replaced by AI spending, which is having a negative impact on Rambus.”