8 Best Small-Cap Growth Stocks to Buy According to Analysts

6. Silicon Motion Technology Corporation (NASDAQ:SIMO)

Market Capitalization: $1.88 Billion

Number of Hedge Fund Holders: 43

Analyst Upside Potential: 60.46%

Silicon Motion Technology Corporation (NASDAQ:SIMO) is a technology company specializing in solid-state storage devices, particularly NAND flash controllers. NAND flash controllers are essential components that manage how data is stored and retrieved on devices like Solid State Drives (SSDs).

Their technology is also used in Embedded Multimedia Cards, within smartphones, USB flash drives, and memory cards, thereby making them a critical player in the storage devices industry. Silicon Motion Technology Corporation (NASDAQ:SIMO) primarily caters to original equipment manufacturers and its technology is poised for significant growth due to its applicability in data centers.

The company, on August 5, 2024 announced SM2508, a cutting-edge PCIe Gen5 NVMe 2.0 client SSD controller designed for AI PCs and gaming consoles. This is a breakthrough for the company as management believes it is one of the most power-efficient controllers in its class. It uses TSMC’s advanced 6nm EUV processes enabling the controller to consume 50% less power compared to its competitors that use the 12nm process.

The SSD controllers are a major source of revenue for the company. During the second quarter of fiscal 2024, the SSD controller sales grew 25% to 30% year-over-year. Overall the net sales of $210.7 million were up 50% during the same time. Analysts are eying for its third quarter results as management anticipates another 25% jump in revenue on a year-over-year basis.

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.”