MaxLinear rebound trade gains support as AI data center demand offsets stock slump

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MaxLinear AI data center rebound

Highlights

MaxLinear revenue climbs 72% year-over-year, with management guiding Q4 revenue between $240 million and $260 million, up to 19% sequential growth.
AI data center demand drives MaxLinear's connectivity business sales to more than triple, with reported order visibility stretching into 2028 despite the stock falling 45% from its 52-week high.
Analyst targets range from $89 to $125 per share, implying 32% to 85% upside from $71, but risks include data center construction limits and cash flow constraints due to advance supply payments.

AI infrastructure growth underpins the trade

As reported by CNBC, investor Steve Grasso is making a high-risk bet on MaxLinear after the stock lost about 45% from its 52-week high despite a strong earnings report.

MaxLinear makes chips that connect servers inside large data centers, helping them exchange data at high speed. The company also sells technology used in wireless infrastructure and consumer electronics, with customers including Dell, Meta, Comcast and Vodafone.

The bullish case centers on recent operating momentum. Revenue jumps 72% from a year earlier, the company beats profit expectations, and management forecasts fourth-quarter revenue of $240 million to $260 million. At the top end, that implies growth of as much as 19% from the third quarter.

Demand tied to AI data centers is a major driver. While MaxLinear does not make AI processors, its connectivity products support the movement of large amounts of data between servers, an increasingly important function as data centers grow in size and complexity. Sales in the company’s connectivity business have more than tripled, and order visibility reportedly extends into 2028.

Sentiment risks and upside targets

Investor caution is focused on the possibility that restrictions on new data center construction could eventually slow AI infrastructure spending. That concern has pressured MaxLinear shares even though the article argues the market may be pricing in a worse outcome than current evidence supports.

At about $71 a share, Grasso sees an asymmetric setup, with the average analyst price target of $89 implying roughly 32% upside. Morgan Stanley’s target of $125 suggests potential upside of nearly 85%, based on the figures cited in the article.

The position is framed as a trade rather than a long-term holding. The article notes the stock could still fall another 30% if fears around data center development continue, and it highlights balance sheet and cash flow risks linked to advance payments for supply and borrowing under a credit line. Because some reported profit has not yet translated into cash, any slowdown in demand could make those commitments more difficult to manage.

Our earlier article on the U.S. AI data center boom highlighted rising obstacles that could slow the buildout, including higher financing costs, construction delays and cancellations, and limits on available power. We also noted that growing local opposition and tighter project economics were starting to weigh on investor confidence, raising doubts about how quickly planned capacity can actually come online.

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