Corsair Gaming Stock Takes Off After Unveiling New AI Products. Should You Buy Into the Rally?

Corsair Gaming (NASDAQ: CRSR) shares have been flying lately. The company, which provides gamers and creators with high-tech computing equipment, has become a hot buy after unveiling new products that focus on artificial intelligence (AI) infrastructure. It's now become a bit of a cross between a gaming stock and an AI stock, and investors are loving it.

On Thursday, the stock hit a new 52-week high, having now more than doubled since the start of the year. Is the rally sustainable, however? Can Corsair Gaming's stock continue to soar higher, or has it become too expensive a buy due to its recent surge?

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What's gotten investors so excited?

Last week, Corsair announced the launch of Corsair Pro, which features AI workstations and servers, aimed at meeting the needs of AI-powered computing. The new systems will include Nvidia chips. Today, the company also announced that Nvidia's G-Assist will have access to its Stream Deck, which will enable the popular device to deploy multiple actions through voice commands.

There's a lot of AI-related news around Corsair lately, and investors are clearly bullish on what it may mean for the business in terms of growth. As companies and individuals are upgrading their tech to take advantage of these new capabilities, there's the hope that Corsair may benefit from this growing trend as well.

Corsair released its latest earnings numbers earlier this month, and they were underwhelming. Net revenue of $354.5 million for the first three months of the year was down 4% from a year ago. And while it did post an operating profit of $13.8 million (versus a loss of $2.3 million a year ago), the margin is still fairly thin at around just 4% of the top line.

Is Corsair's stock destined to go even higher?

Hype around AI can often send a stock soaring, and that's clearly what is happening with Corsair's stock right now. The big test will be whether these new AI products will give the business the boost it needs to turn its sales around. AI tech, however, can be expensive, and with memory prices rising, I'd be worried that the company's already low margins may get even lighter as it focuses more on AI products and infrastructure.

The stock has enjoyed a significant surge in a short time frame, but I wouldn't rush to buy it right now. Even if the new products help boost sales, the growth may come at the cost of reduced profitability, which is already a bit of a concern with the business as it is. And that's why I think a wait-and-see approach might be most appropriate with Corsair's stock.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.