Tuya (NYSE:TUYA): Revisiting Valuation After Strong Earnings and Growing AI Investor Optimism

Tuya (TUYA) just paired upbeat Wall Street sentiment with hard numbers, as its latest earnings showed higher sales and a swing to profit, giving investors fresh data to judge how durable this AI platform story really is.

See our latest analysis for Tuya.

Those Q3 profits and the stable share capital update appear to be feeding into sentiment, with Tuya’s 36.8% year to date share price return signalling momentum after a softer 90 day patch and a solid 3 year total shareholder return of 39.5%.

If Tuya’s AI run has your attention, it could be a good moment to see what else is gaining traction in high growth tech and AI stocks.

With Tuya now profitable and trading roughly 40 percent below analyst targets despite double digit growth, is this still a misunderstood AI platform at a discount, or are investors already pricing in its next phase of expansion?

Most Popular Narrative Narrative: 28.3% Undervalued

With Tuya last closing at $2.38 versus a narrative fair value of $3.32, the storyline leans toward meaningful upside if its assumptions play out.

Ongoing expansion of SaaS and value added services, with SaaS segment revenue growing at a faster rate than PaaS and achieving over 70% gross margin, is structurally shifting Tuya's business model toward higher margin, recurring revenue, supporting long term gross margin improvement and greater earnings visibility.

Read the complete narrative.

Curious how a shift in revenue mix, higher margins and a punchy future earnings multiple all combine into that upside case? The full narrative lays it bare.

Result: Fair Value of $3.32 (UNDERVALUED)

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

However, the narrative could unravel if global trade tensions or intensifying AIoT competition squeeze margins and slow Tuya's international expansion pace.

Find out about the key risks to this Tuya narrative.

Another Angle on Value

On earnings, Tuya trades at 29.7 times, slightly cheaper than the US software sector at 31.4 times and just above its 29 times fair ratio. The discount to peers looks appealing, but that small premium to the fair ratio suggests the market may already be pricing in much of the potential upside.

See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Tuya for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 909 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Tuya Narrative

If you see Tuya’s story differently or want to dive into the numbers yourself, you can build a fresh narrative in just minutes: Do it your way.

A great starting point for your Tuya research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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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.

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