SIMO Stock Target Raised 64% by American Bank on TSM, NVIDIA Partnership

American Bank has recently upgraded its rating for semiconductor design company SIMO from "neutral" to "buy" and raised its target price from 55 dollars to 90 dollars. This adjustment is primarily driven by the company's collaboration with global industry leaders, particularly Taiwan Semiconductor Manufacturing Company (TSM) and NVIDIA (NVDA). The partnership between TSM and NVDA is seen as a significant factor in SIMO's growth prospects, as it leverages TSM's advanced manufacturing capabilities and NVDA's cutting-edge technology.

SIMO, a Hong Kong-based chip design company, specializes in developing NAND flash controllers for solid-state storage devices. Its products are manufactured by TSM, a global leader in semiconductor manufacturing. American Bank's analyst team, led by Simon Woo, highlighted SIMO's strong revenue growth and impressive gross margin performance. This is attributed to the company's strong bargaining power within the supply chain and cost control advantages gained through TSM's foundry services, which mitigate the impact of U.S. tariff policies.

The report emphasizes that, similar to memory chip manufacturers, SIMO is benefiting from the global wave of sovereign AI investments. The company's latest MonTitan series of enterprise-level SSD controllers and boot drives are positioned to capitalize on the growing demand for data center construction. Based on the incremental opportunities driven by AI data centers, American Bank significantly raised SIMO's target stock price from 55 dollars to 90 dollars, corresponding to an expected price-to-book ratio of 3.8 times for 2025-2026, a notable increase from the previous 2.4 times valuation. "The current valuation is approaching the upper limit of the company's historical valuation range of 2.0-4.0 times from 2015-2024," Woo noted in the report. This adjustment reflects the market's optimistic expectations for storage demand driven by AI technology iterations.

Notably, the collaboration between TSM and NVDA is expected to enhance SIMO's product offerings and market competitiveness. TSM, known for its leading-edge semiconductor manufacturing processes, and NVDA, renowned for its innovative GPU technology, are poised to drive SIMO's growth through their combined expertise and resources. This strategic alliance is anticipated to bolster SIMO's ability to deliver high-performance semiconductor solutions, meeting the increasing demand for advanced computing and AI applications. The collaboration is likely to result in the development of more efficient and powerful semiconductor products, further solidifying SIMO's position in the market.

The upgrade by American Bank underscores the potential for SIMO to capitalize on the growing demand for semiconductor technology, particularly in the areas of AI and high-performance computing. The partnership with TSM and NVDA is expected to provide SIMO with a competitive edge, enabling it to innovate and expand its market share. This strategic move is likely to attract more investors and stakeholders, further enhancing SIMO's growth trajectory.