Edge AI And IoT Trends Will Expand eFPGA Licensing

Key Takeaways

• Accelerated adoption in defense, Edge AI, and custom silicon markets positions QuickLogic to capture dominant share, command premium pricing, and drive strong revenue growth.
  
• Integration of open-source tools and deep ecosystem partnerships fosters recurring platform revenue, expanding the customer base and strengthening long-term margin visibility.
  
• Heavy reliance on few customers and legacy products amidst shrinking margins, sustained losses, and geopolitical risks undermines long-term revenue stability and future market relevance.

Catalysts

Operates as a fabless semiconductor company.

• While analyst consensus projects QuickLogic's discrete SRH FPGA and high-density eFPGA IP initiatives to only significantly impact revenues and profits beginning in Q2 2025, the accelerated engagements, increasing urgency of U.S. defense programs, and lack of onshore rad-hard FPGA alternatives indicate QuickLogic could capture dominant market share, generating test chip and production storefront revenues as early as 2026 and potentially hundreds of millions of dollars in multi-year revenue-far exceeding consensus estimates.
  
• Analyst consensus recognizes the anticipated ramp from new eFPGA hard IP contracts and IP optimized for Intel 18A, but this underestimates the compounding effects of a first-mover advantage in advanced onshore nodes and high-density architectures, enabling QuickLogic to command premium pricing, increase customer dependency, and drive both top-line growth and structurally higher gross margins as the ecosystem standard setter.
  
• QuickLogic stands to disproportionately benefit from the surging wave of Edge AI, IoT, and next-gen SoC applications that demand ultra-low power and flexible silicon-leveraging its unique IP and automated tools to enable rapid design wins and widespread adoption, translating into exponential revenue growth across consumer, industrial, medical, and automotive verticals.
  
• The strategic development and integration of open-source toolchains (like Aurora/Aurora Pro) and alignment with major EDA players unlock a self-reinforcing virtuous cycle of ecosystem growth, lowering adoption barriers, expanding the developer base, and driving a high-velocity increase in design starts-positioning QuickLogic for high-margin, recurring platform revenue beyond hardware alone.
  
• The convergence of national security supply chain mandates and migration toward chiplet-based/custom silicon architectures-where U.S.-fabricated, reconfigurable eFPGA is mission critical-gives QuickLogic a multi-year runway for outsized contract wins, diversification, and substantially enhanced earnings visibility, making the current stock price discount an extreme anomaly given the long-term addressable market that could expand by billions.

QuickLogic Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on QuickLogic compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming QuickLogic's revenue will grow by 33.5% annually over the next 3 years.
• Even the bullish analysts are not forecasting that QuickLogic will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate QuickLogic's profit margin will increase from -40.5% to the average US Semiconductor industry of 14.2% in 3 years.
• If QuickLogic's profit margin were to converge on the industry average, you could expect earnings to reach $6.2 million (and earnings per share of $0.31) by about August 2028, up from $-7.4 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 43.9x on those 2028 earnings, up from -12.4x today. This future PE is greater than the current PE for the US Semiconductor industry at 28.5x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.92%, as per the Simply Wall St company report.

QuickLogic Future Earnings Per Share Growth

Risks

• QuickLogic exhibits a high concentration of revenue among a small number of customers and end-markets, particularly in defense and aerospace, increasing its vulnerability to revenue volatility if procurement cycles or budgets change, which poses long-term risk to top-line revenue stability.
  
• Gross margins have shown significant compression, dropping from over fifty percent in Q2 2024 to thirty-one percent in the latest quarter, and are expected to fall further to around five percent in Q3 due to lower revenue absorption of fixed costs, inventory reserve write-downs, and high investment in R&D; this threatens their ability to generate consistent net earnings and limits cash available for future investment.
  
• The company continues to operate at a net loss, with increasing losses forecasted in the near-term as QuickLogic prioritizes self-funded engineering projects instead of more immediate revenue streams, which heightens the risk of prolonged unprofitability and looming dilution risk if additional equity funding is needed.
  
• Heightened geopolitical tensions, protectionism, and the potential for international trade disputes threaten to disrupt critical semiconductor supply chains and access to global foundry capacity-which could delay production schedules, increase input costs, and restrict export opportunities, thereby dragging down revenue and expanding cost of goods sold.
  
• Accelerating technological disruption favors fully integrated SOCs and alternative computing architectures, trends that could shrink demand for traditional FPGA and eFPGA solutions and compress QuickLogic's addressable market, leaving the company exposed to declining revenues if their offerings are rendered less relevant by larger, better-capitalized industry competitors.

Valuation

• The assumed bullish price target for QuickLogic is $10.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of QuickLogic's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $10.0, and the most bearish reporting a price target of just $5.95.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $43.7 million, earnings will come to $6.2 million, and it would be trading on a PE ratio of 43.9x, assuming you use a discount rate of 10.9%.
• Given the current share price of $5.62, the bullish analyst price target of $10.0 is 43.8% 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.