Semiconductor stocks have fallen from their highs, making it a great buying opportunity as the industry continues to enjoy a boom. With the era of artificial intelligence (AI) surging demand for semiconductors across multiple sectors, the Semiconductor Industry Association (SIA) recently reported that semiconductor sales in the second quarter of 2024 will increase significantly by 18.3% year-over-year.
While Nvidia (NVDA) emerges as the undisputed leader in AI chips, many investors are looking at growth opportunities beyond the multi-trillion dollar behemoth. Against this backdrop, penny stock POET Technologies (POET) has emerged as a small powerhouse in the semiconductor space. Trading for less than $5 per share, POET has returned 195% so far in 2024, even outperforming NVDA’s own impressive 150% return.
Here, we take a closer look at this penny stock and its place in the semiconductor industry.
About POET Stock
Toronto-based POET Technologies (POET) is a discreet semiconductor company that designs and manufactures discrete and integrated optoelectronic solutions for the data center and AI markets. The company offers integrated solutions with POET optical interposers, an innovative platform that uses wafer-level semiconductor manufacturing techniques to integrate electronic and photonic devices into a single multi-chip module.
POET was the first company to develop wafer-level optical interposers and has attracted significant attention from data center customers. The company, with a market cap of $175 million, currently operates in China, Singapore, Canada and the United States.
In addition to outperforming NVDA, the company’s stock price is also outperforming the broader market in 2024, with the S&P 500 Index ($SPX) up just 16.5% this year. However, POET is still trimming its 52-week decline of 28.9% and is down 81% over the past decade.
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POET strengthens cash position
On August 15, POET Technologies announced its second quarter results, which showed improvement in many aspects of the company’s numbers. As a non-revenue generating company, the company significantly strengthened its capital acquisition and cash management strategies. The company raised $15 million through two non-brokered private placements and an additional $10 million in one registered direct offering to institutional investors, reflecting strong investor confidence. With this capital injection, POET’s cash reserves increased to $28.7 million by the end of July, ensuring a strong financial foundation for ongoing and future projects.
Additionally, POET issued common stock through its ATM facility to raise $7.4 million to further enhance liquidity. The company’s strategic financing actions aimed at mitigating investment risk position the company for sustained growth and development in the competitive technology space. With these aggressive fundraising activities and meticulous cash management, POET Technologies is well-positioned to pursue its ambitious technology initiatives and expand its market presence.
POET also showcased advanced products such as its 800G transmit optical engine chipset and C-band light source at OFC, setting the stage for future market development, despite reporting a net loss of $8 million ($0.14 per share) in the second quarter.
Advancing AI through strategic partnerships
In the second quarter, POET announced significant design wins in partnerships with Foxconn Interconnect Technology and Luxshare Tech, solidifying its role as a key supplier in the AI and high-speed data center markets. These partnerships strengthen POET’s technology capabilities and global market position.
In addition, with the help of these partners, POET is developing a 3.2T optical engine program and 800G and 1.6T optical transceiver modules for the data center and AI markets. By focusing on advanced optical solutions for AI applications, POET is positioning itself as a potential leader in the fast-growing AI equipment market.
The company was recently recognized as “Best Optical AI Solution” in the 2024 AI Breakthrough Awards program, further validating its approach to AI optical technology.
What do analysts think about POET stock?
A lesser known penny stock in the semiconductor sector, POET Technologies is currently covered by only one Wall Street analyst. That said, the stock is rated a “Strong Buy” with a $7.50 price target, suggesting an ambitious upside potential of 171.6% from current levels.
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On the date of publication, Nauman Khan did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information please see Barchart’s disclosure policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
