Rambus Inc. (RMBS): A Bull Case Theory

We came across a bullish thesis on Rambus Inc. on Uncle Stock Notes’s Substack. In this article, we will summarize the bulls’ thesis on RMBS. Rambus Inc.’s share was trading at $104.13 as of February 19th. RMBS’s trailing P/E was 48.33 according to Yahoo Finance.

Rambus Inc. manufactures and sells semiconductor products in the United States, South Korea, Singapore, and internationally. RMBS has long been perceived as a patent licensing firm with steady but limited upside, yet its latest results reinforce a structural transformation into a product-driven semiconductor company positioned at the core of AI memory infrastructure. While investors crowd into GPUs and power names, Rambus has quietly become a critical supplier of DDR5 memory interface chips, benefiting directly from AI server bandwidth expansion.

Fourth-quarter revenue reached $190.2 million, beating expectations, with product revenue rising 41% year over year to $347.8 million for the full year, driven by DDR5 adoption across next-generation server platforms. Each DDR5 RDIMM requires an RCD chip, and with AI servers demanding higher bandwidth and increasingly adopting MRDIMMs, Rambus is seeing simultaneous volume and pricing expansion within an oligopolistic market dominated by only three suppliers.

Alongside its growing chip segment, Rambus retains a highly profitable licensing engine tied to long-term agreements with major DRAM manufacturers, generating stable cash flow and near-100% margin royalties. The company produced $360 million in operating cash flow for the year and holds $761.8 million in cash with no debt, providing balance sheet strength and strategic flexibility. While seasonal Q1 guidance and a CFO departure created temporary volatility, the stock’s rebound reflects renewed focus on durable AI-driven growth.

Trading at roughly 30x operating cash flow, below comparable IP peers, Rambus offers a differentiated combination of high-margin licensing, expanding AI-exposed chip revenue, and emerging CXL optionality. With DDR5 penetration accelerating and CXL representing a future growth leg, Rambus stands as an undervalued enabler of AI infrastructure with favorable long-term risk/reward dynamics.

Previously, we covered a bullish thesis on Synopsys, Inc. (SNPS) by The Equity Analyst in February 2025, which highlighted EDA positioning and recurring revenue from semiconductor complexity and AI demand. SNPS’s stock price has depreciated by 16.72% since our coverage. Uncle Stock Notes shares a similar view but emphasizes on Rambus Inc.’s transformation into an AI memory interface chip supplier.