This Beaten-Down Chip Stock Just Did Something It Hasn't Done in a Year. Time to Buy?

Chip stocks have made a nice recovery over the past several weeks, with most climbing out of the red and into the black for the year. Generally, it has been a case of investors buying back in after chip stock valuations dived in the first quarter, among other factors.

But not all chip stocks have managed to move back into positive territory year to date during this recovery. One beaten-down chipmaker, Impinj (NASDAQ: PI), has struggled with negative returns, down about 12% year to date.

Image source: Getty Images.

However, the company did something in the first quarter that it hadn't done in a year -- and that led to a 27% surge in its stock price since its April 29 earnings release. The price skyrocketed from about $120 per share to about $153 per share.

What exactly did Impinj do? It guided for positive net income in the second quarter, well beyond analysts' expectations. So, is Impinj stock a buy now?

Impinj and the Internet of Things

Impinj makes radio frequency identification (RAIN) RFID chips for everyday items, clothing, and appliances so they can be identified and connected to the Internet of Things.

Impinj stock had soared to over $235 per share in late October 2025 and finished the year up about 20%. In early January, the stock traded around $209 per share, but it began tanking, dropping to a closing low of around $91 per share on March 12 -- a decline of 56%.

Part of it was that Impinj was caught up in the overall tech market sell-off due to its high valuation. The company had generated net losses in the last two quarters of the year, mainly due to a combination of macroeconomic headwinds, supply chain issues, and inventory imbalances. Essentially, it had excess inventory, with revenue slowing due to various factors.

So, in the second half of the year and into 2026, its retailers and partners had to burn down the excess inventory. This meant there was less need for new orders until that inventory was rightsized.

This came to a head in the first quarter of 2026, when, due mainly to inventory concerns, the company guided to just $71 million to $74 million in revenue -- which was some 22% below the $96 million it made in Q4 2025. Investors reacted swiftly, dumping shares due to the lower revenue projections and the already overvalued stock price.

A brighter outlook

In the first quarter, Impinj actually beat its guidance, generating $74.3 million. But it still had a net loss of about $25 million, or $0.83 per share.

However, it appears that this may have been the bottom for Impinj, as things turned decidedly brighter in its outlook for the second quarter.

For the first time since the second quarter of 2025, Impinj guided for positive net income, calling for $7.6 million to $9.1 million in generally accepted accounting principles (GAAP) net income. Impinj also guided for a massive revenue increase in Q2, calling for $103 million to $106 million in income, which is some 41% higher than Q1 and well beyond analysts' estimates.

This caused the stock price to jump some 27% since the April 29 earnings release and Q2 outlook.

This huge projected revenue jump is fueled by record Endpoint IC bookings, which are Inpinj's RFID chips for the Internet of Things. It is an indication that the inventory issues have cleared up and demand is surging again.

Is it enough to push Impinj stock into the buy zone? It is still highly overvalued, trading at 74 times forward earnings, so I would be wary of that. There may be a better opportunity to buy at a lower valuation in the coming weeks or months after the dust settles from this recent surge.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool recommends Impinj. The Motley Fool has a disclosure policy.