A Look at Adeia’s (ADEA) Valuation Following Patent Litigation Against AMD and a Revised 2025 Revenue Outlook

Adeia (ADEA) has taken legal action against AMD, accusing the chip giant of infringing on a series of important semiconductor patents. The lawsuit comes after attempts at reaching a licensing deal broke down.

See our latest analysis for Adeia.

The legal battle with AMD lands at a challenging moment for Adeia, as its 1-month share price return has dropped 27.8% and the stock is now trading near $12. Despite this short-term dip, the company’s long-term total shareholder returns remain robust. Its five-year total return is 167%, which suggests momentum could return if litigation outcomes spark renewed growth interest.

If this shakeup in the semiconductor space has you looking for fresh opportunities, consider expanding your search and discover fast growing stocks with high insider ownership

With shares trading nearly 40% below analyst targets and long-term growth still intact, investors may wonder whether this drop presents a buying opportunity or if the market is already factoring in Adeia’s future prospects.

Most Popular Narrative: 37.5% Undervalued

Adeia’s fair value according to the most widely followed narrative stands at $19.75, sharply above the recent close of $12.35. This sets the stage for a narrative full of bold growth expectations and significant catalysts amid ongoing legal and earnings volatility.

The company's ability to sign new multi-year agreements with blue-chip customers (e.g., STMicroelectronics and prominent OTT/e-commerce platforms), with over 40% of recent license deals being new customers, signals successful execution on its growth strategy, contributes to a broader and more diversified royalty base, and supports longer-term revenue and EBITDA growth.

Read the complete narrative.

Want to know why the fair value punches so far above the stock price? The secret sauce is hidden in the narrative: ambitious growth rates, expanding profit margins, and a future earnings power that challenges conventional market wisdom. Uncover how these ingredients combine for such a striking upside. Read the full narrative for all of the numbers and context.

Result: Fair Value of $19.75 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing litigation costs and the threat of regulatory changes could quickly undermine Adeia’s earnings stability and challenge today’s bullish narrative.

Find out about the key risks to this Adeia narrative.

Build Your Own Adeia Narrative

If you see things differently or prefer to dive into the details yourself, you can shape your own perspective in just a few minutes. Do it your way

A great starting point for your Adeia research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.

Ready for More Smart Ideas?

Don’t let your next winning stock slip past you. Find proven performers and unique opportunities tailored to your goals using these powerful tools from Simply Wall Street.

• Tap into reliable income streams and cut through the noise by checking out these 14 dividend stocks with yields > 3% with attractive yields above 3%.
• Get ahead of transformative market trends by following these 26 AI penny stocks at the heart of the artificial intelligence boom.
• Uncover tomorrow’s market leaders before they make headlines by browsing these 3583 penny stocks with strong financials built on robust financials.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com