SiTime stock surged Thursday as the maker of timing chips became the latest company to get a sales boost from the buildout of data centers for artificial intelligence.
Late Wednesday, the Santa Clara, Calif.-based company delivered much better-than-expected results for the third quarter, fueled by the chipmaker's data center business.
SiTime earned an adjusted 40 cents a share on sales of $57.7 million in the September quarter. Analysts polled by FactSet had expected earnings of 26 cents a share on sales of $55.1 million. On a year-over-year basis, SiTime earnings jumped 567% while sales surged 62%.
SiTime specializes in making micro-electromechanical systems, known as MEMS, for timing devices in electronics. Timing devices synchronize the activities of various chips in a system.
On the stock market today, SiTime stock jumped 19% to close at 225.51.
"SiTime is the leader in a dynamic new semiconductor category that we call precision timing, which is the heartbeat of modern electronics," Chief Executive Rajesh Vashist said on a conference call with analysts. "Whether it is in AI data centers, networking infrastructure, automated vehicles, personal mobility or IoT (Internet of Things), SiTime's precision timing delivers better performance and reliability."
Revenue in SiTime's communications, enterprise and data center (CED) business grew over 200% year over year in the third quarter. The company expects sales in the unit to more than double in 2024.
"CED has been a major driver of our growth, driven by cloud service provider investments in AI infrastructure," Vashist said.
SiTime Stock Is A Top Performer
"Looking forward into 2025, we believe that the AI market will continue to grow as newer generations of AI servers and networking equipment are rolled out," he said. "We expect CED to continue to lead SiTime growth next year. In AI data center infrastructure, SiTime's products are solving difficult timing problems in applications such as top-of-the-rack switches and optical modules."
Needham analyst Quinn Bolton reiterated his buy rating on SiTime stock and raised his price target to 225 from 140.
"We expect timing content to continue trending higher given the performance and reliability requirements of next-generation infrastructure," Bolton said in a client note. "The company's products are exposed to a wide range of AI infrastructure applications. … The company's leadership here positions it well to grow server content as buildouts continue."
SiTime stock has an IBD Relative Strength Rating of 96 out of 99, according to IBD Stock Checkup. That puts it in the top 4% of stocks for performance over the past 12 months.
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