Automotive, Defense And Edge AI Markets Will Unlock Memory Potential

Key Takeaways

• Diversifying into automotive, industrial, aerospace, and defense drives long-term growth, with onshoring efforts boosting resilience and recurring revenues.
  
• Advancing next-gen MRAM and partnerships in edge AI and IoT expand the addressable market, supporting margin growth and new licensing opportunities.
  
• Dependence on a few major customers, inconsistent royalty income, margin pressures, and volatile sales cycles threaten financial stability despite hopeful signs in new product development.

Catalysts

Manufactures and sells magnetoresistive random access memory (MRAM) technologies in the United States, Japan, Hong Kong, Germany, Singapore, China, Canada, and internationally.

• Adoption in Automotive, Industrial, and Aerospace: New and expanded design wins in electric vehicles (e.g., Lucid Gravity, Bugatti Nevara), defense, and satellite systems (e.g., Blue Origin, Astro Digital) highlight accelerating diversification into markets requiring high-reliability, persistent memory solutions—positions Everspin for durable top-line growth as electrification and automation expand across sectors.
  
• Commercialization of Next-Gen MRAM: Successful ramp of PERSYST 1Gb STT-MRAM in high-performance data center storage (IBM FlashCore) and upcoming full production of new automotive-grade xSPI products expected in late 2025 indicate increasing market penetration of leading-edge technology, supporting future revenue increases and potential gross margin expansion.
  
• Expansion of Edge AI and IoT Opportunities: Partnerships with customers like Purdue University to deliver low-power, high-endurance MRAM for energy-efficient edge AI devices and neurocomputing applications demonstrate Everspin’s alignment with the proliferating need for instant-on, persistent memory in IoT and edge computing—driving a structurally larger addressable market and incremental licensing/royalty revenues.
  
• Onshoring and Defense Contracts for Manufacturing Resilience: Increased U.S. government and defense sector engagement—including the $14.6M DoD sustainment contract for onshore MRAM capabilities and large radiation-hardened custom projects—offer visible and potentially recurring revenue streams, underpinning balance sheet strength and improving earnings stability.
  
• Early Signs of Industrial Recovery and Backlog Rebuild: Management commentary and customer behavior (accelerating backlog, conversion of recent design wins into production, and emerging green shoots in industrial markets) signal a potential cyclical upturn in core product revenue, with leverage to operating margins as utilization and volumes improve.

Everspin Technologies Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Everspin Technologies's revenue will grow by 12.9% annually over the next 3 years.
• Analysts are not forecasting that Everspin Technologies will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Everspin Technologies's profit margin will increase from -0.4% to the average US Semiconductor industry of 13.6% in 3 years.
• If Everspin Technologies's profit margin were to converge on the industry average, you could expect earnings to reach $9.6 million (and earnings per share of $0.38) by about May 2028, up from $-183.0 thousand today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 28.9x on those 2028 earnings, up from -763.6x today. This future PE is greater than the current PE for the US Semiconductor industry at 23.4x.
• Analysts expect the number of shares outstanding to grow by 4.4% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.2%, as per the Simply Wall St company report.

Everspin Technologies Future Earnings Per Share Growth

Risks

• Everspin’s product revenue growth is heavily reliant on a handful of flagship design wins (e.g., IBM FlashCore, Lucid Motors, select aerospace/defense projects), making it vulnerable to customer concentration and the risk of sharp revenue declines should key clients shift to competing memory technologies or develop in-house solutions, thus impacting revenue stability.
  
• The company’s high-margin licensing, royalty, and patent revenue declined notably year-over-year and remains “lumpy” and project-dependent; without consistent growth in this stream, gross margin may remain pressured if product mix shifts toward lower-margin sales, suppressing earnings and profit expansion.
  
• Gross margin for product revenues appears volatile and was recently calculated at 47%, down substantively from 54% in prior quarters; ongoing margin compression could result from manufacturing cost disadvantages against larger semiconductor peers or pricing pressure from intensifying competition, thereby limiting long-term net margins.
  
• Everspin’s sales and revenue trajectory are subject to seasonality and inventory cycles within its customer base, as admitted by management’s expectation of “second half weighting” due to inventory corrections and last-minute order behaviors. This cyclicality poses the risk of inconsistent earnings and complicates long-range financial planning.
  
• While management sees green shoots in backlog and new product traction, ongoing R&D expenditure and inventory build without clear, durable demand ramp could weigh on cash flow; if commercialization and large-scale adoption of new MRAM solutions lag expectations, elevated costs may outpace growth, undermining both net income and available financial resources for future innovation.

Valuation

• The analysts have a consensus price target of $8.5 for Everspin Technologies based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $70.6 million, earnings will come to $9.6 million, and it would be trading on a PE ratio of 28.9x, assuming you use a discount rate of 9.2%.
  
• Given the current share price of $6.22, the analyst price target of $8.5 is 26.8% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.