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The Raspberry Pi (LSE:RPI) share price gained 14.5% in the FTSE 250 today (24 September). This brought the stock’s year-to-date return to an eye-catching 142%!
Is it too late to consider buying shares of this growing tech firm? Let’s discuss.
Record results
The reason for today’s jump was a strong half-year report put out by the maker of single-board computers. Indeed, it was a record performance in both sales and profitability.
Revenue increased 90% to $256.9m and adjusted EBITDA soared 108% to $40.3m. For context, EBITDA was expected to be $42m for the whole year in early June. Pre-tax profit jumped 216% to $19.6m.
The company shipped 4.2m units, up 17% year on year, while the customer order backlog doubled to 2.6m units. Gross profit per board increased 53% to $12.20.
Note that direct unit shipments increased faster, up 26% to 3.4m, showing that original equipment manufacturer (OEM) adoption is accelerating. In other words, Raspberry Pi’s gaining traction with larger customers. There was particularly strong demand from the smart home and aerospace and defence sectors.
During the period, the firm released five new products, including AI HAT+ 2 for the Raspberry Pi 5. This adds local generative AI capability, allowing large language models and vision-language models to run directly on the board.
With a substantial order backlog, expanding production capacity and a strong pipeline of OEM opportunities, Raspberry Pi is well positioned for rapid growth in unit shipments in 2027 and beyond.
CEO Eben Upton
The boost’s fading…
However, H2 will be trickier because the exceptional unit economics in H1 were flattered by higher board prices and the consumption of much cheaper memory inventory acquired last year. But with this stockpile consumed, and memory now being bought at much higher prices, H2 unit economics will moderate.
This is already starting to show, as profit per board overall dropped to $10.80 in June. So while it’s encouraging that Raspberry Pi’s securing supply, there’s still uncertainty around margins and the supply chain heading into 2027.
Indeed, management doesn’t expect meaningful new memory supply to come on stream until 2028, and it’s also using debt to secure supply.
The flip side though is that smaller rivals are struggling to get memory chips, which is allowing Raspberry Pi to take market share and improve its competitive position. And management still sees full-year EBITDA being ahead of current market consensus.
More growth to come?
Looking past the current supply chain challenges, I see a lot to like here (I’m a shareholder). The firm’s growth is broad-based, with demand growing in both China and the US.
Meanwhile, there’s growing interest from defence giants and national militaries for cost-effective computing solutions for advanced autonomy (drones for surveillance purposes, for example).
There’s also a notable uptick in demand for edge-AI inference applications (those that process data on device rather than in the cloud). The launch of AI HAT+ 2 positions the company to capture a growing share of this opportunity.
Finally, its Internet of Things platform Raspberry Pi Connect is gaining traction, adding incremental recurring revenue from devices in the field.
The stock isn’t conventionally cheap, but I think Raspberry Pi is worth considering by investors seeking a tech company with clear long-term growth tailwinds from edge AI and defence.
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Ben McPoland owns shares in Raspberry Pi.
This story originally appeared on Motley Fool
