Silicon Motion Technology (SIMO) is set to report Q4 results above consensus and toward the high end of prior guidance and provide solid Q1 and 2026 outlooks, Wedbush Securities said in a note on Monday.

The analysts said that Q4 results will benefit from better-than-expected personal computer demand, stable handset shipments, and market share gains. In addition, continued NVIDIA (NVDA) rack builds should support solid boot drive demand.

The MonTitan product ramp is also tracking better than expected, helped by stronger shipments from Pure Storage to Meta (META), though its overall impact remains relatively small due to the low starting base, the analysts added.

Looking ahead, the main headwind for Silicon Motion Technology is the potential slowdown in consumer electronics production, including PCs, smartphones, and external storage, driven by higher memory costs and supply constraints, the analysts said.

"At the same time, we see numerous offsets that we believe will allow Silicon Motion to grow at accelerated rates through 2026 and 2027 (albeit perhaps not as quickly as in an environment with greater NAND availability)," the analysts said.

The analysts said that China remains an important growth driver, with sales exceeding $300 million in 2024 and likely surpassing $400 million in 2025. With Yangtze Memory Technologies Co, or YMTC, expected to significantly increase bit shipments in 2026, the analysts see further upside to Silicon Motion's China revenue.

Wedbush lifted its price target on Silicon Motion Technology to $130 from $120 while keeping its outperform rating.

Price: 120.16, Change: +1.23, Percent Change: +1.03