CEVA

CEVA is a high-quality IP-licensing franchise wearing a richly-priced AI story. The business is genuinely strong where it counts: 87.1% gross margin, a stated 68% share of the 2024 wireless connectivity IP market, ~2.1B devices shipped with its IP in 2025, and a fortress balance sheet — $336M equity, $40.6M cash (up 119%), $285M current assets against just $28.7M current liabilities, and effectively no debt. The MD&A's Physical AI framing (connect/sense/infer) and a $170B TAM by 2030 are the bull case, and the 54 IP licensing agreements signed in 2025 — including a full NeuPro portfolio license with Microchip and a NeuPro NPU win with a 'global PC and smart-device leader' — are real, royalty-building wins that management says are constructing 'long-term royalty trajectory and visibility.'

The problem is that none of this is yet in the numbers, and you are paying a premium as if it were. Revenue of $110M (+2.5%) is essentially flat across five years ($114M in 2021, $110M in 2025), and the company has lost money every year since 2021: FY2025 net income of -$10.6M actually worsened 21%, operating income deteriorated 50% to -$11.3M, and operating cash flow turned negative at -$3.36M. Meanwhile shares outstanding rose 16.6%, diluting holders while the company also spent $7.15M on buybacks. ROE is -3.2%. At $43.03 the market cap is $1.19B — 10.9x sales — a multiple that only makes sense if the signed licenses convert into a steep royalty ramp that inflects the model to profitability.