In a striking ascent, MediaTek Inc.’s stock has surged by nearly 40% since late June, fueled by a surge in smartphone demand in China and the unveiling of their cutting-edge AI chip. This remarkable performance outshines competitors such as Qualcomm (NASDAQ:QCOM) Inc. and the broader Philadelphia Semiconductor Index.
MediaTek’s latest technological offering, the Dimensity 9300 chip, positions itself as a formidable competitor to Qualcomm’s Snapdragon 8 Gen 3, signaling a substantial stride for MediaTek in the competitive AI sector—an area of heightened investor interest for the upcoming year. Analysts are responding with positivity, reflecting a 13% upward revision of MediaTek’s earnings forecast and a 27% increase in the target price.
The debut of the Dimensity 9300 chip is particularly noteworthy in the Vivo X100 smartphone, with OPPO’s Find X7 series expected to follow suit. Both models are engineered to seamlessly handle intricate AI tasks, providing an elevated gaming experience. Market projections suggest that this innovation will catapult MediaTek’s flagship smartphone market share from its current levels to a range between 30%-35% by the next year.
GAM Hong Kong Ltd.’s Robert Mumford highlights MediaTek’s compelling valuation in relation to its growth prospects. The resurgence of the handset market, coupled with the timely release of their system-on-chip, has played a pivotal role in this valuation. Additionally, there has been a notable reduction in short interest since the peak in June.
Following a period of sales decline, MediaTek anticipates growth in the current quarter, driven by a surge in China’s smartphone industry, which witnessed an 11% increase in sales in October. Trading at approximately 17 times forward earnings and boasting a market cap exceeding $47 billion, MediaTek continues to solidify its influential presence in Taiwan’s economy.
