This Artificial Intelligence (AI) Chip Stock Is Making a Big Move, and It Has the Potential to Soar Higher

In This Article:

Key Points

  • Shares of this Apple supplier have shot up impressively in the past month.

  • Analysts have bumped up their earnings expectations from this chipmaker, which is trading at an attractive valuation right now.

  • Investors can expect this chip stock to deliver impressive gains thanks to the secular growth opportunity in AI-enabled smartphones and PCs.

  • 10 stocks we like better than Cirrus Logic ›

Apple supplier Cirrus Logic (NASDAQ: CRUS) has witnessed a big jump in its stock price in the past month, jumping 23% as of this writing after it emerged that its largest customer is getting a reprieve from the tariff turmoil.

Cirrus Logic supplies audio codecs, power amplifiers, camera controllers, haptics modules, and other types of chips that are used in smartphones and personal computers (PCs). Apple is its largest customer, accounting for 89% of the top line in the recently concluded fiscal 2025, which means that Cirrus' fortunes are closely tied to the iPhone maker.

So, the Trump administration's decision to exempt imports of smartphones, computers, and chips from tariffs came as a welcome relief for Cirrus Logic investors. Tariffs could have dented Apple's sales since a large chunk of iPhones are produced in China, and the tech giant would have been forced to increase prices substantially to absorb the tariff impact.

And now, the agreement between the U.S. and China to substantially slash tariffs for 90 days further suggests that the trade war between the two economic giants is cooling off. It may be a good idea to buy shares of Cirrus Logic in such a scenario.

A clock with the words "Time to Buy" written on the dial.
Image source: Getty Images.

Cirrus Logic's growth is gaining momentum thanks to AI

Cirrus Logic's revenue in the recently concluded fiscal 2025 (which ended on March 29) increased by just 6% year over year. Its adjusted earnings, however, increased at a much faster pace of 14% from the preceding year to $7.54 per share.

Though Cirrus' growth may not seem all that great, it is worth noting that the chipmaker performed well during a difficult year for its largest customer. Apple's iPhone shipments in 2024 fell slightly from the previous year. However, Cirrus was able to overcome this challenge as it won more business from Apple.

The chipmaker is now supplying power management modules to Apple as well, apart from audio codecs, which should have allowed it to mitigate the slight drop in iPhone volumes. But now, the arrival of Apple's artificial intelligence (AI)-enabled iPhones is boosting sales. The tech giant's smartphone shipments shot up an impressive 10% year over year in Q1 this year, which was way ahead of the 1.5% growth of the overall smartphone market.