Cirrus Logic Stock Surges on Strong Apple iPhone Upgrade Cycle

Key Points

• Cirrus Logic designs chips that improve audio, power-saving, and haptic functions in mobile devices and consumer electronics.
• Cirrus Logic reported a stellar fiscal Q1 2025, crushing top and bottom line consensus estimates and Q2 raising guidance.
• Since Apple accounts for 87% of Cirrus Logic's revenues, investors are confident about a strong iPhone 16 launch in September 2024.

Cirrus Logic Inc. NASDAQ: CRUS is a semiconductor developer focused on audio and haptic technology. Haptics refer to the touch response feedback you receive, such as the subtle vibrations when tapping on a smartphone screen or the rattle of a video game controller during a firefight. Cirrus Logic’s chips are used in various consumer electronics ranging from audio headphones to augmented and virtual reality headsets, automotive entertainment systems, power supplies, wearables, smartphones, and laptops.

The company reported a strong fiscal Q1 2025 earnings report, raising its forward guidance. Since Apple Inc. NASDAQ: AAPL accounts for nearly 87% of its revenues, investors are taking it as a sign of strength for Apple’s upcoming iPhone 16 launch.

Cirrus Logic operates in the computer and technology sector, competing with semiconductor companies like Texas Instruments Inc. NASDAQ: TXN, Synaptics Inc. NASDAQ: SYNA, and Skyworks Solutions Inc. NASDAQ: SWKS.

Practical Uses of Cirrus Logic Chips Everywhere

Cirrus Logic chips can be found in Sony Inc. NYSE: SNE PlayStation 5 and Microsoft Co NASDAQ: MSFT Xbox game controllers. Haptic feedback has become a game changer when playing video games as they help set the tone during action sequences and combat creating an immersive experience for the gamer. Cirrus Logic chips are found in literally every smartphone and tablet with touchscreens.

Cirrus Logic continues to evolve haptic and sensing technology to adapt to slimmer devices with fewer mechanical controls. Cirrus Logic is focused on growing its audio codec, haptics driver, power converter, and boosted amplifier products. Cirrus is also exploring opportunities with laptops and its third-generation camera controller due out later in the year.

Is Cirrus Logic Overly Reliant on Apple’s Business?

All Apple Inc. iPhones, tablets, and smartwatches carry Cirrus Logic chips. Apple has become even more embedded into Cirrus Logic's business. They've become a larger contributor to total revenues yearly, from 79% in fiscal 2022 to 82% in fiscal 2023 to 87% of total revenues in fiscal 2024. While Apple has been a major contributor to growth, it also puts Cirrus in a vulnerable spot if it loses Apple as a customer. The recent earnings report bodes well for the Apple iPhone 16 launch coming in September 2024.

CRUS Stock Forms a V Bottom

The daily candlestick chart for CRUS formed a V bottom. The lip line commenced at $132.78 on July 31, 2024, as shares sank to $107.62 in 3 days. CRUS staged a sharp rally off the low, accelerating on the Aug. 7, 2024 earnings gap to retest the lip line. CRUS will either break out above the lip line and form new support there on pullbacks or reject back below it under $132.78. The daily relative strength index (RSI) is stalling around the 56-band. Pullback support levels are at $125.75, $121.00, $112.55, and $107.62.

A Home Run Quarter as Cirrus Logic Knocks the Ball Clear Out of the Park

Cirrus Logic reported fiscal Q1 2025 EPS of $1.12, crushing consensus analyst estimates for 61 cents by 51 cents. GAAP earnings were 76 cents. Revenues surged 18% YoY to $374.03 million, handily beating $318.41 million consensus estimates. Cirrus Logic has started to ramp up production of its next-generation boosted amplifier and its first-ever 22-nanometer smart codec ahead of new smartphone launches later in the year. These will continue to ship across multiple generations. The legacy codec and amplifier have already shipped over 1 billion and 3.5 billion units, respectively, over the past six years.

Raising the Bar with Upside Guidance

Cirrus Logic has increased its revenue forecast for fiscal Q2 2025 to between $490 million and $555 million. This updated guidance surpasses the consensus estimate of $485.33 million.

Cirrus Logic CEO John Forsyth commented, “We see significant customer demand and engagement around our audio codec, boosted amplifier, haptic driver, and power converter products, supporting our belief that this is a market where Cirrus Logic can enhance the end-user experience, improve the performance of our customers' products, and increase both content per device and market share over time.”

Cirrus Logic analyst ratings and price targets are at MarketBeat. There are seven analyst ratings on CRUS stock, comprised of six Buys and one Hold. Consensus analyst price targets point to a 7.9% upside at $143.33.