Bank of America Securities recently upgraded Silicon Motion from Neutral to Buy, raising their price target to $90. The upgrade centers on Silicon Motion’s growing presence in enterprise storage and AI-driven solutions. Accelerating sales of enterprise SSD controllers, bolstered by key partnerships with leading NAND producers and hyperscalers like NVIDIA, are driving renewed optimism. Gross margins remain robust at around 47%, and the company’s foundry relationships, particularly with TSMC, help mitigate trade-related risks while maintaining pricing strength.
Another potential catalyst is the ongoing arbitration with MaxLinear, where Silicon Motion could secure a significant $160 million award by late 2025. While first-quarter 2025 revenue dipped 12% year-over-year to $166 million, the company exceeded expectations on both gross margin and net profits, providing confidence in its operating leverage and resilience.
🔸 Dividend fundamentals: The stock currently yields about 2.9% to 3.0%, supported by quarterly dividends of $0.50 per share. The payout ratio ranges between 45% and 75% on an earnings basis, while the cash coverage ratio sits near 90%. The company boasts a consistent 13-year dividend payment history, appealing to income-focused investors looking for both stability and modest growth potential as AI adoption accelerates.