Why Shares of Poet Technologies Are Soaring Today
Key Points
Poet Technologies develops optical engines suited for AI computing.
Marvell announced the acquisition of Celestial AI.
A Poet investment represents a higher degree of risk, so investors should proceed with caution.
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After inching 1.5% higher yesterday, shares of Poet Technologies (NASDAQ: POET) are poised to lock in an even greater gain today. With an analyst providing a more optimistic outlook on shares of the photonic chips specialist, investors are clearly motivated to click the buy button on Poet stock.
As of 10:44 a.m ET, shares of Poet Technologies are up 15.9%.
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Becoming more bullish for a Marvell(ous) reason
Maintaining its outperform rating on Poet stock, Northland hiked its price target to $8 from $7. According to thefly.com, Northland has an increasingly bullish outlook on several suppliers of components for optics solutions -- such as Poet -- due to Marvell's acquisition of Celestial AI, a designer of an optical connectivity platform suited for artificial intelligence (AI) computing.
In the press release announcing the acquisition, Marvell characterized the acquisition as "a transformational milestone in accelerating the company's connectivity strategy for next-generation AI and cloud data centers."
Poet recently debuted 1.6T optical receivers (developed in collaboration with Semtech) that support advanced AI clusters and data center interconnects.
Based on Poet stock's closing price of $4.68 on Tuesday, Northland's $8 price target implies upside of about 71%.
Is it a bright idea to buy shares of this photonics specialist?
The acquisition of Celestial AI certainly bodes well for photonics peers such as Poet. To buy shares of Poet based solely on Northland's raised price target seems unwise, though. Analysts often have shorter investing horizons than the multi-year holding periods that The Motley Fool favors.
Nonetheless, investors seeking an AI stock with strong growth potential would be wise to consider Poet at this point. Of course, it's essential to recognize that the investment carries a higher degree of risk, as it's not yet generating substantial revenue, so investors should proceed with caution.
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Scott Levine has no position in any of the stocks mentioned. The Motley Fool recommends Marvell Technology. The Motley Fool has a disclosure policy.
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