Over the past several years, the big news in tech has swirled around the AI boom. AI – especially generative AI, and now, agentic AI – is changing the workplace in myriad ways, from streamlining data flow to speeding up content generation, to increasingly taking over online customer interactions. More and more businesses are using AI to handle at least one mundane task. And for investors, the semiconductor sector has been the obvious place to cash in.
The biggest winner in all of this has clearly been Nvidia. The chipmaker was ideally positioned for a stratospheric take-off when the AI boom began; as the company that popularized the GPU processors that made AI possible, Nvidia had a head start in providing the high-end semiconductor technology that was suddenly in huge demand. In the past three years, shares in Nvidia have gained more than 680%.
But even though Nvidia leads the pack in AI returns, it is far from the only game in town. Plenty of other tech firms are building on AI, basing their growth on new products, or developing new modes of interfacing human operators with machine intelligence.
The stock analysts at Needham are following this logic, pounding the table for two smaller stocks working in the AI and semiconductor fields. One is a cloud-based communications platform helping businesses streamline their workflows with AI-powered tools, and the other develops AI-enhanced human-machine interface chips used in touch, display, and voice technologies.
So, let’s take a closer look and with some help from the TipRanks database, we can find out if the general Street view aligns with Needham’s take.
RingCentral (RNG)
The first stock we’ll look at, RingCentral, is well known in small- and medium-sized business circles. The company is primarily a UCaaS – unified communications as a service – provider, offering solutions for a wide range of communications issues relevant to the modern office environment. RingCentral’s core products are centered around business communications – phone systems, video calling and screen sharing, call forwarding, and other staples of business telecommunications, all routed through the customer’s computer servers. The company’s communications packages are also made compatible with popular office software applications, and are accessible from individual desktop workstations and handheld devices. The result is a flexible and adaptable office communications system.
More recently, RingCentral has integrated AI technology into its communications packages. The company offers real-time AI assistance packages for support agents, designed to put the correct information at the agent’s fingertips no matter what the question. Agents can provide faster, more accurate responses to customer queries, and service centers can log better results. AI support is available for agent supervisors as well, providing real-time data insights to identify interactions that may require additional support.
RingCentral is also offering an AI receptionist, capable of taking notes, writing and translating messages, and polishing provided texts. The AI can make sure that the user doesn’t miss any details, and can even create personalized, context-appropriate SMS messages for more efficient communications. AI features are available for business phone plans, event planning, contact centers, and even offer data insights on conversational intelligence.
Communications is a vital part of any business, and RingCentral has leveraged that to realize a steady increase in its revenues and earnings. In the last quarter reported, 1Q25, the company’s top line came to $612 million, up almost 5% year-over-year and $1.37 million better than had been expected. RingCentral’s Q1 bottom-line, an adj. EPS of $1.00, came in $0.04 ahead of the estimates.
Two additional metrics bear mention here. RingCentral generated $130 million in free cash flow for 1Q25, equivalent to 21.3% of the total revenue. This compared favorably to the $77 million free cash flow in 1Q24. In addition, the company reported that annual recurring revenue, an important predictor of future business, exceeded $2.5 billion in the quarter.
Covering this stock for Needham, analyst Joshua Reilly sees the company’s strong position, solid products, and effective use of AI as important advantages – and he cites the free cash flow and ARR as supportive of continued success. Reilly writes, “We believe RNG is well positioned to expand their strong UCaaS market share in voice, while creating new AI based products that can sell into the SMB market, where they have the highest growth rate. Additionally, we believe the financial engineering underway including increasing FCF margins, while paying down debt and reducing net leverage to 2x and lower will lead to a higher multiple for shares. We expect new AI products can exceed $100mm in ARR exiting FY25, in-line with management guidance, while supporting the overall ARR growth rate of 7.3% for Q1/25. With a combination of improving growth and profitability, while decreasing leverage, we believe steady execution can lead to strong share performance in 2H/25.”
Reilly quantifies this stance with a Buy rating and a $36 price target that indicates a one-year upside potential of 28.5%. (To watch Reilly’s track record, click here)
The Needham view is at the bullish end of the spectrum; overall, RNG shares get a Hold consensus rating, based on 16 recent reviews that include 5 Buys, 10 Holds, and 1 Sell. The shares are currently priced at $28.01, and the $32.38 average target price suggests that the stock has a gain of 15.5% waiting for it in the year ahead. (See RNG stock forecast)
Synaptics(SYNA)
Next on our list is Synaptics, a company that specializes in developing human-computer interfaces, the technologies that allow users to interact with machines in meaningful ways. Synaptics has over 2,600 patents and works with more than 470 original equipment manufacturers, and its product lines include wireless connectivity devices and touchpad modules. The company is particularly well-known for its involvement in IoT technology, and for its design and production of the integrated circuits that make touchpad controls, display drivers, video interfaces, and integrated touchpad/display units possible.
Synaptics’ products are used in a wide range of applications, including laptop computers, PC accessories, AR/VR headsets, smartphones and smart displays, and even in on-board automotive interface systems. Among its product lines, Synaptics is developing new lines of microprocessor units, MCUs, essential in delivering high-performance, AI-native, multimodal computing capabilities for consumer, enterprise, and industrial applications. Prominent among these are the Astra SR100 series, created to deliver intelligence and to enable a new class of IoT devices that are ‘context-aware.’ The Astra SR100 series is designed to support a wide range of AI-capable accelerators and peripherals, including cameras, image processing, and motion and voice activity detection engines. These features pre-adapt the series to support the next generation of IoT devices, with streaming vision and audio processing.
The company is also collaborating with Google to develop Edge AI for IoT applications, a partnership that was announced in January of this year. And at the end of last month, Synaptics announced extensions to its Veros wireless portfolio, with the release of the first Veros WiFi 7 family of systems-on-chips (SoCs), specifically designed for use with IoT. The new WiFi 7 tech allows multi-link operations, by which devices can send and receive data streams via multiple frequency bands simultaneously, supporting low latency, high reliability, and high throughput. The new tech is particularly useful in real-time applications, such as video calls and high-end multi-player gaming.
On the financial side, Synaptics reported $266.6 million in revenue for fiscal 3Q25, its last reported quarter. This figure was up 12% year-over-year and exceeded the forecast by $1.57 million. The company reported a non-GAAP EPS of 90 cents, 4 cents better than analysts’ estimates.
What this comes down to, for analyst Nick Doyle, is that Synaptics has a solid position in the expanding combination of wireless networking and AI. The Needham analyst writes of the company, “We believe Synaptics is executing well given their historical target market (IT enterprise spending) has been focused elsewhere (AI DC buildout). Recent moves in Core IoT (Google and Broadcom partnerships) position the company for stronger growth; we expect to see WiFi-7 devices later this year while Veros and Astra families should layer on in FY27. New products like UPD and Foldable OLED controllers support growth as well. Net, we believe SYNA will improve its revenue growth and operating margin profile as product mix shifts towards the higher growth Core IoT segment.”
Doyle goes on to rate SYNA as a Buy, and he gives the stock an $80 price target that suggests it has a 22% upside on the one-year time horizon. (To watch Doyle’s track record, click here)
Overall, the Street puts a Moderate Buy consensus rating on Synaptics’ stock, based on 6 Buy and 3 Hold reviews. The shares have a current trading price of $65.38 and their $82 average price target is slightly more bullish than the Needham view, implying a one-year gain of 25.5%. (See SYNA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
