This Networking Stock Is Soaring 80%. It's Finally Getting the AI Premium. -- Barrons.com, from 1 hour ago by Dow Jones
1 hour ago by Dow Jones
By Nate Wolf
Stocks tend to spike when investors start treating them like artificial-intelligence winners. MaxLinear is the newest company to benefit from that AI sheen.
Shares of the optical networking company soared 80% to $61.52 on Friday after a blockbuster earnings report that should put the stock back on Wall Street's radar.
If the gains hold through the close, they would represent the stock's largest-ever single day percent increase and its highest close since 2022, according to Dow Jones Market Data.
MaxLinear reported adjusted earnings of 22 cents a share for the first quarter, above analysts' consensus call for 18 cents. Revenue totaled $137.2 million, up 43% from last year and in line with past guidance.
But the most important number for investors was the 136% annual growth in infrastructure revenue, driven by optical data-center platforms. That jump makes infrastructure the largest part of MaxLinear's business, surpassing broadband.
"We expect this gap to widen over the next few years on robust data center demand," wrote Needham analyst N. Quinn Bolton in a research note Friday. "Given the structural change in the company we believe investors will be willing to pay a higher premium for a data center infrastructure play."
MaxLinear guided for net revenue of $160 million to $170 million in the second quarter, blowing past Wall Street's earlier forecast of $137.1 million. Management also raised its optical data-center revenue outlook for 2026 by $40 million to between $150 million and $170 million.
The company's Keystone optical transceiver platform is helping drive that growth, CEO Kishore Seendripu said on a conference call Thursday, adding that Keystone is "ramping at multiple major high-scale customers across both the U.S. and Asia."
Analysts had been waiting for an inflection point in MaxLinear's infrastructure business, and they finally have it. Needham upgraded the stock to Buy and set a price target of $60. Susquehanna lifted its target by 50%, to $45 from $30, and held a Neutral rating. Stifel analysts reiterated a Buy rating and boosted their target to $49 from $34.
"In short, this was the constructive update that many had been hoping for," wrote Susquehanna analyst Christopher Rolland.
That may be underselling things if Friday's stock move is anything to go by. MaxLinear shares are now up roughly 250% this year and 500% over the last 12 months. Investors who have been waiting for this moment may now fear they waited too long.
Then again, perhaps there is room to run. The stock trades at 43.6 times projected 12-month earnings. That is double what its multiple was a year ago but still well below the valuations of much larger, more well-known networking stocks such as Lumentum and Ciena.
