GSI Technology Q2 Loss Narrows Y/Y on SRAM Demand

Shares of GSI Technology, Inc. GSIT have declined 24.5% since the company reported its earnings for the quarter ended Sept. 30, 2025. This compares to the S&P 500 index’s 0.5% decline over the same time frame. Over the past month, the stock has gained 81.7% compared with the S&P 500’s 2% growth, highlighting the stock’s high volatility amid investor reactions to both company fundamentals and forward-looking developments.GSI Technology incurred a loss per share of 11 cents for the second quarter of fiscal 2026, narrower than a loss of 21 cents per share in the year-ago quarter. The company’s revenues of $6.4 million marked a 41.6% increase from $4.6 million in the same quarter of fiscal 2025. This year-over-year revenue expansion was driven by increased demand for the company’s static random-access memory (SRAM) products.However, the company’s net loss narrowed to $3.2 million from $5.5 in the priro-year quarter. Gross margin also improved year over year to 54.8%, from 38.6%, primarily due to changes in product mix.GSI Technology, Inc. Price, Consensus and EPS Surprise GSI Technology, Inc. price-consensus-eps-surprise-chart | GSI Technology, Inc. QuoteBusiness Metrics Show Mixed TrendsKey customer concentration shifted notably during the quarter. Sales to Cadence Design Systems represented 21.6% of total revenues, up from zero in the prior-year period. Conversely, Nokia’s contribution fell sharply to 3.1% from 17.8% a year ago. KYEC accounted for 12.5% of revenues, slightly down from 14.3% in the same quarter last year.Military and defense-related shipments made up 28.9% of total shipments in the quarter, declining from 40.2% in the prior year. SigmaQuad SRAM sales comprised 50.1% of shipments, an increase from 38.6% in the same quarter last year.Operating expenses totaled $6.7 million, lower than the $7.3 million reported in the second quarter of fiscal 2025, driven by a year-over-year reduction in research and development spending, which declined from $4.8 million to $3.8 million. Management Commentary Highlights Strategic AdvancesCEO Lee-Lean Shu emphasized the technological milestone achieved with the publication of a Cornell University study validating the performance of GSI’s Gemini-I chip. The study found that the chip matched the performance of NVIDIA’s A6000 GPU on retrieval-augmented generation tasks while consuming over 98% less energy. Shu framed this as a significant validation of the company’s compute-in-memory architecture and highlighted that Gemini-II, which offers 8 times the memory and 10 times the performance of Gemini-I, is poised to deliver further breakthroughs.The CEO also confirmed that the recently raised capital would fund ongoing Gemini-II software development and kickstart the Plato chip design. The company is targeting edge AI markets and defense applications with its Associative Processing Unit (APU) technology and is working to convert proof-of-concept projects into commercial contracts in 2026.Drivers Behind the Headline NumbersThe substantial year-over-year revenue increase was largely attributed to the ramp-up in SRAM sales and growing traction with defense and enterprise customers. However, gross margin erosion on a sequential basis reflected a less favorable product mix in the second quarter.Cadence’s emergence as a top customer and the rebound in military-related shipments also supported revenue. Meanwhile, lower sales to Nokia and an uptick in operating expenses from Q1 impacted profitability. Stock-based compensation, totaling $0.9 million, rose year over year.In the earnings call, management pointed to efficiency improvements and potential design wins as factors that could narrow losses going forward. The gross margin guidance for Q3 FY26 is 54% to 56%, aligning with the current quarter’s margin, and revenue is expected to be between $6 million and $6.8 million.Guidance Signals Continued InvestmentManagement expects third-quarter revenues to be relatively flat to modestly higher, and gross margin to remain steady. Capital deployment from the $50 million direct offering will be allocated toward completing Gemini-II, developing accompanying software, and progressing on the Plato chip. The company has tentatively scheduled the tape-out of the Plato chip for early calendar year 2027.Planned customer engagement includes multiple defense and aerospace prospects, with evaluations underway. Management also mentioned a new initiative to develop a multi-modal LLM targeting edge applications, with initial benchmark results expected by year-end.Other DevelopmentsDuring the quarter, GSI Technology closed a $50 million registered direct offering, significantly boosting its liquidity. This funding nearly doubled the company’s cash position to $25.3 million from $13.4 million at the end of March 2025. Working capital and shareholder equity also improved substantially. Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report GSI Technology, Inc. (GSIT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks