Cirrus Logic-This Artificial Intelligence (AI) Stock Is Down 30% From Its 52-Week Highs: Is It Worth Buying Right Now?

Company Performance - Cirrus Logic's stock has declined nearly 30% since hitting a 52-week high on Aug 29, with shares falling 7% in extended trading after the release of its fiscal 2025 Q2 results [2] - The company reported fiscal Q2 revenue of $542 million, up 13% year-over-year and 45% sequentially, exceeding its guidance midpoint of$ 520 million [4] - Earnings per share increased 25% year-over-year to $2 25, driven by a 90 basis point improvement in non-GAAP gross margin to 52 2% [8] - However, the company expects fiscal Q3 revenue to decline nearly 18% year-over-year to a midpoint of$ 510 million, partly due to one less week of revenue compared to the previous fiscal year [9] Customer Concentration - Apple accounted for 90% of Cirrus Logic's revenue last quarter, with the company benefiting from higher unit volumes associated with new iPhone launches [5] - Cirrus is reportedly supplying both audio and power management chips for the latest iPhone generation, indicating diversification beyond audio chips into other niches [6][7] - Despite Apple's iPhone shipments increasing 3 5% in Q3 2024 to 56 million units, Cirrus reported a much stronger year-over-year revenue increase, suggesting higher revenue per iPhone unit [6][7] Industry Trends - Apple's iPhone 16 Pro models have shorter shipping times this year, with the Pro model at 14 days (down from 24 days) and the Pro Max at 19 days (down from 32 days) [11] - Pre-orders for the iPhone 16 Pro and Pro Max models were down 27% and 16% respectively this year, potentially leading Apple to pull back production plans for the holiday quarter [12] - The slow start for the latest iPhone models may be due to the gradual rollout of Apple's AI features, with several features only becoming available next year [14] Future Outlook - The generative AI smartphone market is expected to grow at an annual rate of 78% through 2028, reaching 912 million units by the end of the forecast period [15] - Apple, as the world's second-largest smartphone company with a 17 7% market share, is well-positioned to benefit from the growth of the generative AI smartphone market [6][16] - Cirrus Logic's close ties to Apple and its presence in the growing generative AI smartphone market could drive future growth, with the stock currently trading at an attractive 20 times earnings [16][17]