Issue #94

Beyond the GPU surge, these two specialized chipmakers are securing the infrastructure for autonomous tech and wireless cities. Analysis inside.

The semiconductor revolution isn’t being won by the flashiest consumer gadgets or the most expensive GPUs alone—it’s being decided in the invisible connections that move data between them. As the world shifts toward fully autonomous vehicles, 8K medical imaging, and "fiber-speed" wireless cities, two critical layers matter more than anything else:

the high-speed physical links that prevent data bottlenecks, and the millimeter-wave spectrum that untethers our most advanced infrastructure from physical cables.

This is where the semiconductor conversation shifts from general computing to specialized connectivity—and where the most agile, high-tech "underdog" winners are emerging.

👉 One company is becoming the standard "nervous system" for the next generation of software-defined vehicles and ultra-high-definition professional video.

👉 The other is pioneering the wireless "fiber" technology that allows massive data to move through the air at multi-gigabit speeds.

👉 Both are sitting on world-class intellectual property, holding massive cash-to-debt advantages, and are increasingly viewed by analysts as the "coiled springs" of the small-cap chip sector.

In this edition, we break down the high-speed wired backbone and the wireless future powering the edge-AI economy—and why these two stocks sit at the foundation of the next decade of hyper-connected growth.

Valens Semiconductor (NYSE: VLN)

Valens Semiconductor (NYSE: VLN) is a leader in high-performance connectivity, pushing the boundaries of data transmission for the audio-video and automotive industries. Its proprietary HDBaseT and MIPI A-PHY technologies enable the transmission of ultra-high-definition video, audio, and power over long distances using standard, low-cost cabling. By setting the industry standard for high-speed, long-reach connectivity, Valens powers everything from sophisticated 4K medical endoscopes to advanced driver-assistance systems (ADAS) in modern vehicles.

Business Model and Revenue Streams 📦

Valens operates as a fabless semiconductor company, focusing on the research, development, and sale of advanced chipsets. Their business model is built around establishing their technology as the global standard, which creates a "sticky" ecosystem of customers who integrate Valens chips into their core hardware designs. The company earns revenue through two primary segments:

Cross-Industry Business (CIB): This is the company's largest and most established revenue driver, accounting for approximately 73% of total 2025 revenue. It serves the professional audio-video, industrial, and medical markets. As 4K and 8K video become the baseline for corporate conferencing and medical imaging, demand for Valens’ VS3000 and VS6320 chipsets has grown, providing a stable foundation of high-margin income.

Automotive: This segment represents the company’s high-growth frontier, contributing about 27% of revenue. Valens provides the connectivity "backbone" for sensors, cameras, and infotainment in vehicles. While this segment is currently smaller, it is highly strategic as the automotive industry shifts toward autonomous driving, which requires the massive, low-latency data bandwidth that Valens provides.

Valens' business model is notably sensitive to macroeconomic conditions and global trade policies. Because its products are integrated into high-end consumer electronics and new vehicles, fluctuations in consumer spending and global interest rates directly impact order volumes. Furthermore, with significant operations in Israel and a portion of revenue coming from the Chinese market, the company is particularly exposed to geopolitical tensions and U.S. export controls on semiconductor technology. Management has recently shifted to providing only single-year guidance to account for this reduced visibility in the global macro environment.

Recent Performance and Corporate Developments 📈

Valens reported strong financial results for the fourth quarter and full year 2025 on February 25, 2026, marking its seventh consecutive quarter of revenue growth.

Q4 and FY 2025 Financial Highlights: 💰

• Total Revenue: Q4 revenue reached $19.4 million, exceeding the top end of guidance. Full-year 2025 revenue totaled $70.6 million, a 22% increase over 2024.
• Net Profit/Loss: While the company reported a GAAP net loss of $31.6 million for the full year 2025, this was an improvement from the $36.6 million loss in 2024. Q4 specifically saw a net loss of $8.8 million.
• Gross Margin: The company maintains very healthy margins, with a full-year GAAP gross margin of 62.4%. This highlights Valens' strong pricing power and the specialized nature of its chipsets.
• Segment Performance: The Audio-Video (CIB) segment saw a major recovery, with VS3000 chipset sales nearly doubling year-over-year. Conversely, Automotive revenue saw a 12% decline due to price erosion and lower volumes from key partners like Mercedes-Benz.

Strategic Initiatives and Mergers: 🤝

In early 2026, Valens initiated a significant operational efficiency plan, which included a 10% reduction in its global workforce. This move is expected to save $5 million annually as the company focuses on reaching break-even. On the technology front, Valens continues to expand its "A-PHY" ecosystem. Recently, a major Korean supplier, MCNEX, launched the industry's first automotive-grade QHD cameras using Valens' chipset, further solidifying the company's lead in the automotive sensor market.

Profitability and Fair Value 🎯

Valens is currently in a transition phase, moving from a high-growth "cash-burn" state toward sustainable profitability. While it is not yet net-profitable on a GAAP basis, the path is becoming clearer through:

• Cost Management: The 2026 workforce reduction and streamlined R&D are designed to narrow the EBITDA loss, which was $16.9 million in 2025.
• Focus on High-Margin Chips: By doubling down on the VS3000 and VS6320 chipsets in the ProAV market—which carry higher margins—the company is improving its overall earnings profile.

In terms of fair value, Valens is frequently cited as undervalued by analysts. With a Price-to-Sales (P/S) ratio of roughly 2.1 (well below its historical average) and a massive cash pile of $92.6 million with zero debt, the company’s enterprise value is low relative to its market-leading technology.

Analyst Estimates and Ratings 📊

• Consensus Rating: The consensus remains a "Buy" or "Outperform," reflecting strong confidence in the company's technology.
• Price Target: The average 12-month price target is approximately $3.75, representing a potential upside of over 150% from its current trading price of roughly $1.50. High-end estimates reach as far as $5.25.
• Recent Momentum: Despite a slight pre-market dip following the Q4 earnings miss on EPS, analysts have largely reiterated their "Buy" ratings in the last 30 days, citing the revenue beat and the 2026 growth guidance of 8%.

Investor-Focused Takeaway: Is VLN Right for Your Portfolio?

Valens Semiconductor offers a high-risk, high-reward "pick and shovel" play for the automotive and 4K video revolutions. Unlike many penny stocks, Valens has a strong balance sheet with nearly $100 million in cash and no debt, providing a significant "margin of safety" while it works toward profitability.

What to Watch in the Near Term: 📈

• Automotive Design Wins: Watch for new partnerships with Chinese or European OEMs for the VA7000 chipset; these are the keys to long-term explosive growth.
• Path to Break-Even: Monitor if the $5 million in expected cost savings from the workforce reduction begins to show up in the next two quarterly reports.
• Macro Conditions: Given the shift to single-year guidance, any significant cooling in the automotive or ProAV sectors could delay the company's timeline to reach profitability.

Recommendation:

Valens (VLN) is a compelling speculative buy for investors who believe in the long-term necessity of high-speed in-vehicle connectivity. While the current net losses require patience, the company's massive cash reserves and technological moat make it one of the more fundamentally sound "penny" plays in the semiconductor space.

Peraso Inc. (NASDAQ: PRSO)

Peraso Inc. (NASDAQ: PRSO) is a pioneer in high-performance millimeter-wave (mmWave) wireless technology, specifically focusing on the 60 GHz spectrum. The company provides chipsets and modules that enable multi-gigabit wireless connectivity for applications ranging from Fixed Wireless Access (FWA) to high-speed tactical communications for the defense sector. By delivering "fiber-like" speeds without the need for physical cabling, Peraso is a key player in bridging the digital divide and enabling next-generation edge AI and robotaxi communications.

Business Model and Revenue Streams 📦

Peraso operates on a fabless semiconductor model, designing and selling specialized mmWave hardware and software. Their strategy is built on capturing the transition from traditional Wi-Fi to high-frequency mmWave solutions, which offer much higher data capacity and lower latency. The company’s revenue is categorized into two main pillars:

Millimeter Wave (mmWave) Products: This is the company's primary growth engine, representing over 90% of current product revenue. Peraso sells ICs (integrated circuits) and antenna modules to service providers and equipment manufacturers. These components are used to build wireless networks that can deliver gigabit speeds to homes and businesses where laying fiber optic cable is too expensive or physically impossible.

Memory ICs: Historically, Peraso (through its legacy business) sold high-performance memory products. However, the company has successfully transitioned away from this segment, completing "end-of-life" shipments in early 2025. This allows Peraso to focus entirely on the higher-margin, high-growth potential of the mmWave market.

The company’s revenue is heavily influenced by macroeconomic factors such as government infrastructure spending. For instance, the BEAD (Broadband Equity, Access, and Deployment) program in the U.S. is a major catalyst for the FWA market. Conversely, Peraso faces risks from global supply chain fluctuations and high interest rates, which can cause its customers—many of whom are smaller wireless internet service providers—to delay large-scale network rollouts. Additionally, significant share dilution over the past year has been a point of concern for investors as the company seeks to fund its operational path to profitability.

Recent Performance and Corporate Developments 📈

Peraso’s recent financial reports highlight a company in the middle of a major pivot toward its mmWave technology.

Q3 2025 Financial Highlights: 💰

• Total Revenue: Revenue hit $3.2 million, a strong 45% increase sequentially from Q2 2025. This growth was almost entirely driven by record shipments of mmWave products, which surged to $3 million.
• Net Loss: The company reported a GAAP net loss of $1.2 million ($0.17 per share), a notable improvement from the $1.8 million loss in the previous quarter.
• Gross Margin: Peraso achieved a GAAP gross margin of 56.2%, up significantly from 48.3% in Q2. This improvement reflects a more favorable mix of high-value mmWave products and disciplined cost management.

Strategic Initiatives and Mergers: 🤝

The most significant news for PRSO investors in 2026 is the ongoing discussion regarding a potential strategic transaction with Mobix Labs. While an all-stock merger has been discussed since early 2026, a definitive agreement has yet to be finalized. This has created a period of uncertainty but also potential for a "premium" exit for shareholders. Furthermore, Peraso recently expanded its board by appointing wireless veteran Cees Links, the "father of Wi-Fi," signaling a serious push to dominate the next era of wireless standards.

Profitability and Fair Value 🎯

Peraso is not yet profitable, but it is narrowing its losses. The company’s "Bullish" case rests on two factors:

• Operational Leverage: As mmWave shipments scale toward the 2-million-unit milestone (recently surpassed), the fixed costs of R&D are spread over a larger revenue base.
• New Market Entry: Peraso is moving into the tactical defense and "Robotaxi" sectors, where specialized communication links command much higher margins than standard consumer hardware.

In terms of fair value, Peraso is a classic "deep value" or "distressed" play. With a market cap of approximately $8 million, it trades at a significant discount to its estimated fair value of $1.70. Analysts argue that if the company can secure a merger or reach a revenue "inflection point" where it becomes cash-flow positive, the upside could be substantial.

Analyst Estimates and Ratings 📊

• Consensus Rating: Peraso currently holds a "Strong Buy" consensus rating from the analysts who cover the stock.
• Price Target: The average 12-month price target is approximately $2.75, representing a massive potential upside of over 200% from its current price of roughly $0.86. Some aggressive targets place the stock as high as $3.00.
• Earnings Surprise: Peraso has a history of beating analyst expectations, including a +40% earnings surprise in the third quarter of 2025.

Investor-Focused Takeaway: Is PRSO Right for Your Portfolio?

Peraso is a "pure play" on the future of mmWave technology. It is a high-conviction choice for investors who believe that 5G and 6G infrastructure will rely heavily on the 60 GHz spectrum. However, the stock's low price and small market cap make it highly volatile.

What to Watch in the Near Term: 📈

• Mobix Labs Merger: Any definitive news on the merger or sale of the company will be the primary driver of the stock price in 2026.
• Q4 2025 Results: Management has guided for revenue between $2.8 million and $3.1 million. Meeting or exceeding the top end of this range will be crucial to maintaining momentum.
• Cash Reserves: With roughly $1.9 million in cash as of late 2025, the company may need to raise more capital or finalize a merger to sustain its operations through 2026.

Recommendation:

Peraso (PRSO) is a high-risk "moonshot" investment. While the fundamental technology is industry-leading, the company’s financial tightrope walk makes it suitable only for investors with a high risk tolerance and a long-term view of the wireless infrastructure market.

Final Take: The High-Speed Backbone and Wireless Future of Connectivity

The semiconductor evolution isn't just about processing power—it's about the seamless movement of data. That requires two things: hardware that eliminates data bottlenecks in our vehicles and wireless tech that delivers fiber-like speeds through the air.

That’s where Valens Semiconductor (VLN) and Peraso (PRSO) stand apart.

🚗 Valens Semiconductor (VLN) — The Nervous System of Next-Gen Mobility

• ✔ Market Leader: Setting the global standard for long-reach, high-speed connectivity in Automotive and ProAV.
• ✔ Massive Margin of Safety: $92.6 million in cash with zero debt—a rare fortress balance sheet for a penny stock.
• ✔ Path to Profit: Significant cost-cutting measures in 2026 designed to accelerate the timeline to break-even.
• ➤ Best for: Investors seeking a high-moat, undervalued entry into the autonomous vehicle and ultra-HD video infrastructure.

📡 Peraso (PRSO) — The Wireless Fiber Engine for the Edge-AI Era

• ✔ Record Momentum: Recent 45% sequential revenue growth driven by massive demand for mmWave chipsets.
• ✔ Strategic Optionality: Ongoing merger potential with Mobix Labs provides a significant near-term catalyst.
• ✔ Explosive Upside: Currently trading at a deep discount to analyst price targets with a "Strong Buy" consensus.
• ➤ Best for: Aggressive investors looking for a "moonshot" play on the 60 GHz wireless revolution and tactical defense communications.

Investor Insight

🧩 Want the "sticky" hardware standard for the future of cars and 8K video? → VLN

⚙️ Want high-leverage exposure to the wireless infrastructure boom? → PRSO

Bottom Line:

The next decade of technology doesn't scale on slow connections—it scales on bandwidth and low latency. Valens owns the wires that make modern cars smarter, while Peraso provides the invisible fiber that connects our cities.

As global infrastructure shifts toward edge-AI and 5G/6G expansion, VLN and PRSO aren't just penny stocks—they are the foundational building blocks of a hyper-connected world.

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Happy Trading
​— Team Premium Stock Alerts