16. Vicor Corporation (NASDAQ:VICR)
Vicor Corporation (NASDAQ:VICR) was one of the stocks on which Jim Cramer shared his take, explaining that dot-com analogies do not hold up in this market. Cramer showed positive sentiment toward the company but suggested waiting for a pullback. He stated:
Just look at Vicor’s numbers. When the company reported its latest quarter last month, its product and royalty revenue jumped 20% year over year. Its gross margin rose to 55.2%, up from 47.2% the year before. They posted a 7-cent earnings beat off a 37-cent basis, and their one-year backlog jumped 70% just versus the previous quarter. When backlog explodes like that, investors lose their minds, and their full-year forecast was strong as well… This is what people want. At the same time, Vicor has a very close relationship with Cerebras. That’s an AI accelerator company that’s expected to come public this week, in a heavily oversubscribed deal. That’s one of the reasons why this thing’s moving the way it is…
The bull case here is straightforward: AI racks are getting more power-hungry, chips are getting denser, and power delivery is becoming a bigger part of the story, and that’s where Vicor comes in. Now, you can see why people are excited. Vicor could become much more important as the AI build out moves from the second layer, semiconductors… down the stack to the first layer… Vicor currently trades at 25 times this year’s sales estimates and more than 100 times forward earnings. That means the market’s not just paying for a good quarter, it’s paying for strong execution, and for Vicor to become a much bigger company over the next several years. That can happen.
But when a stock’s already up more than 600% in a year, the margin for error, it’s small now. The backlog has to convert, the lead customers have to keep ramping, more customers have to adopt the technology, and margins have to hold up… So where do I come out? Alright, I think Vicor is a strong AI infrastructure story. The company is solving a bottleneck that gets worse as AI systems get bigger, hotter, and more power hungry… The latest quarter was strong, the backlog and guidance were excellent, but the stock already has a parabolic move… While I’m not calling it a sell, I wouldn’t do that because the story’s very good and the numbers are moving in the right direction, I can’t chase it here. It’s just not my style.
Here’s the bottom line: If you already own Vicor, I understand you wanting to keep your exposure. I would happen to take a little off the table. But this is exactly the kind of underfollowed AI infrastructure play that can keep surprising people as long as the company continues to deliver. But if you don’t own it, please be patient. Let the stock cool off. Let it digest this move. It will happen. Wait for a pullback.
Vicor Corporation (NASDAQ:VICR) develops and sells modular power components and systems designed to convert electrical power for various electronic devices. The company provides converters, accessories, and custom solutions to industries such as defense, aerospace, and telecommunications.
