MaxLinear Inc. (MXL) makes radio frequency (RF), analog, digital, and mixed-signal integrated circuits for connectivity and access. That’s a business we expect to grow significantly as demands on data infrastructure build, explains George Gilder, editor of Gilder’s Moonshots.

Though badly battered by the cyclical downturn in the industry, MXL remains a powerhouse of innovation, its products well-aligned with market trends:

Optical datacenter links: MaxLinear’s 5nm CMOS Keystone 800G digital signal processor enables ultra-fast 800-gigabit-per-second optical transmission rates. Adoption of 800 Gbps is growing as datacenters cope with AI. MXL’s devices are being designed into pluggable modules by leading manufacturers, including Jabil and Optomind. MaxLinear management expects to exceed the high end of its initial $10-$30 million revenue target in this space for 2024.

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AI and hyperscale computing: The Rushmore family of 200G/lane PAM4 SERDES and DSPs, developed with Samsung, show outstanding power efficiency and performance, providing advanced signal integrity and data processing capabilities for next-generation data transmission at 200 gigabits per lane.

Enterprise Ethernet: New 2.5GbE PHY and switch products expand MaxLinear’s addressable market by $300 million. Customers are upgrading 1GbE ports to 2.5G speeds to enhance network speed and capacity. Design wins have been robust, including a Tier 1 North American OEM ramping in late 2024. MXL’s Ethernet revenue could reach $100 million in 18-24 months.

Broadband access: MaxLinear is getting new design wins with its integrated fiber Passive Optical Network (PON) gateway System on Chip (SoC) designed to enhance fiber-optic broadband access. PON revenue may double to more than $100 million in two years. The WiFi 7 Wave700 SoC is also doing well in qualifications with service providers.

Enterprise storage: The Panther III hardware accelerator delivers industry-leading compression, data protection, and performance for flash storage systems. A new integration with Dell’s PowerMax platform is ramping. Storage revenues could double in 2024.

After a challenging 2023 (across the tech sector), MaxLinear’s recent financial performance shows signs of improvement. In Q1’24, MaxLinear recorded revenue of $95.3 million, down 24% sequentially and 62% year-over-year. Yet revenue projections for the current quarter are cautiously optimistic, guiding to revenue of $90-110 million.

The company’s stock market capitalization has declined by over 70% during the downturn to under $2 billion, making for an attractive valuation perspective, with a price-to-sales ratio of 3 and a forward P/E of 21 versus the Russell 2000 market comp forward P/E of 23.

Recommended Action: Buy MXL

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