Synaptics (SYNA): A Buy Before the IoT and Edge AI Revolution Takes Off

The semiconductor industry is on the cusp of a transformative era, driven by the convergence of the Internet of Things (IoT) and edge artificial intelligence (AI). At the forefront of this shift is Synaptics (SYNA), a company that has quietly positioned itself as a critical enabler of next-generation technologies. With Q4 2025 results underscoring robust growth, a compelling product roadmap, and a valuation that appears to lag behind its potential, Synaptics offers a rare opportunity for investors to capitalize on a high-potential niche before the broader market catches on.

Q4 2025: A Snapshot of Momentum

Synaptics' Q4 2025 results, reported in June 2025, painted a picture of accelerating momentum. Revenue hit $282.8 million, a 14.3% year-over-year increase, with Core IoT product sales surging 55% to $84 million. This segment now accounts for nearly a third of total revenue, reflecting Synaptics' successful pivot toward IoT—a market projected to grow at a 20% CAGR through 2030.

Non-GAAP earnings per share (EPS) soared to $1.01, a 57.8% year-over-year jump, while gross margins remained resilient at 53.5% (non-GAAP). These figures highlight Synaptics' ability to balance innovation with operational discipline. Meanwhile, the company's balance sheet remains strong, with $391.5 million in cash and a new $150 million share repurchase program, signaling confidence in its capital structure and long-term value.

Growth Catalysts: Astra Processors and Wi-Fi 7

Synaptics' most significant catalysts lie in its Astra processors and Wi-Fi 7 solutions, both of which are poised to redefine edge computing.

1. Astra Processors: Edge AI at the Core
   Co-developed with Google Research, the Astra processors are designed to execute transformer-based AI models directly on devices, eliminating the need for cloud connectivity. This is a game-changer for IoT applications, where latency and data privacy are critical. The processors support workloads like text generation, video analysis, and predictive maintenance, all while maintaining ultra-low power consumption. Engineering samples are already in the hands of customers, with revenue expected to materialize in 2026.

The strategic partnership with Google adds credibility and opens doors to enterprise clients. A marquee design win with a leading audio OEM—selected for Synaptics' edge AI-ready silicon and ecosystem support—further validates the product's market potential.

1. Wi-Fi 7: The Next Connectivity Standard
   Synaptics' Wi-Fi 7 solutions are gaining traction across IoT, automotive, and enterprise sectors. These chips offer ultra-low power consumption and smaller form factors, making them ideal for smart devices. With the Wi-Fi 7 transition expected to accelerate in 2026, Synaptics is well-positioned to capture market share, particularly as competitors struggle to balance performance and power efficiency.

The company reported a 55% year-over-year increase in design opportunities for Wi-Fi 7, with ramping expected as customers launch next-gen products. This aligns with broader industry trends: Wi-Fi 7 is projected to account for 30% of IoT connectivity by 2027, according to market research firm ABI.

Strategic Execution: A Recipe for Long-Term Success

Synaptics' ability to execute its roadmap is a key differentiator. The company has consistently delivered high-silicon-content solutions that integrate analog/mixed-signal, multicore processors, and wireless connectivity. This vertical integration reduces dependency on third-party components and enhances gross margins.

Moreover, Synaptics has demonstrated disciplined R&D spending, allocating $93.6 million in Q4 2025 to develop cutting-edge technologies like Astra and Wi-Fi 7. This investment is paying off: the company's Core IoT segment now drives over 30% of revenue, up from 25% in Q3 2025.

Undervaluation: A Mispricing in a High-Potential Niche

Despite its strong fundamentals, Synaptics remains undervalued. As of August 2025, the stock trades at a P/E ratio of 39.02, a moderate premium to its historical average but a steep discount to peers like Qualcomm (QCOM) and Broadcom (AVGO), which trade at P/E ratios of 157.426 and 1,428.727, respectively.

The disparity is even more pronounced when considering Synaptics' market capitalization of $2.3 billion, which lags behind its revenue growth and technological leadership. For context, companies like Nordic Semiconductor and Cypress Semiconductor—both smaller than Synaptics—trade at P/S ratios of 5.0 and 3.8, respectively. Synaptics' P/S ratio of 2.1 suggests the market is underestimating its IoT and edge AI potential.

Investment Thesis: Buy Before the Revolution

Synaptics is a textbook example of a “buy before the revolution” opportunity. The company's Q4 2025 results confirm its ability to scale Core IoT and edge AI, while its product roadmap—anchored by Astra and Wi-Fi 7—positions it to benefit from multi-year secular trends.

Key risks include short-term volatility in IoT demand and execution risks in scaling Astra production. However, Synaptics' strong cash flow ($74 million in Q3 2025), disciplined share repurchases, and strategic partnerships mitigate these concerns.

For investors with a 3–5 year horizon, Synaptics offers an attractive risk-reward profile. The stock is currently priced for modest growth, but the potential for 30–40% annualized returns exists if the company captures even a fraction of the edge AI and Wi-Fi 7 markets.

Conclusion

Synaptics is not just a semiconductor supplier—it is a foundational player in the IoT and edge AI revolution. With a compelling product pipeline, strong financials, and an undervalued stock, SYNA represents a rare opportunity to invest in a high-potential niche before the broader market recognizes its potential. For those willing to look beyond short-term noise, Synaptics is a buy.