3 Reasons to Buy Silicon Motion Technology Stock Like There's No Tomorrow

Memory has become a vital part of the artificial intelligence (AI) boom. That was the big takeaway from Micron's (NASDAQ: MU) superb results in its fiscal 2026 Q3. However, if you're looking for a growth stock that will 10x from current levels, you don't start with trillion-dollar companies.

Silicon Motion Technology (NASDAQ: SIMO) is another memory stock that is riding the same tailwinds as Micron, but far fewer people know about that one. Its relative obscurity, combined with strong fundamentals, makes it a candidate for 10x returns. These are the three reasons why.

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Memory is a parabolic growth opportunity

It's important to understand what Micron did in its fiscal 2026 Q3 when evaluating the opportunity Silicon Motion Technology offers. First, we'll talk about Micron. The $1 trillion memory company posted $41.5 billion in revenue, smashing the previous guidance of $33.5 billion. Its results mark a 73.8% sequential revenue jump and more than 4x year-over-year growth.

Silicon Motion Technology soared by more than 7% in after-hours trading after Micron delivered earnings, and that's because some investors see the connection. Silicon Motion Technology specializes in NAND flash controllers for solid-state storage devices. It serves as a critical piece of the same memory bottleneck that Micron serves. Granted, Micron specializes in high-bandwidth memory chips, but both companies are key parts of the memory industry.

That has also translated into both companies exhibiting meaningful growth rates. However, we started with Micron since Silicon Motion Technology reports its next earnings at the end of July. Micron's earnings are essentially a teaser for what Silicon Motion Technology investors can expect.

Still, the company's last earnings report showed substantial growth. Silicon Motion Technology doubled its revenue year-over-year in Q1, and that includes a 23% sequential increase. Guidance got crushed in this quarter. Leadership only expected $306 million in Q1 revenue at the high point, but ended up with $342 million.

Since Micron crushed its recent guidance, it's easy to expect that Silicon Motion Technology will do the same, suggesting the company reports Q2 revenue of more than $411 million, more than doubling year-over-year sales.

AI is fueling most of Silicon Motion Technology's growth

Silicon Motion Technology lists three business segments each time it reports earnings: SSD controller sales, eMMC + UFS controller sales, and Ferri & Boot Drive solutions sales. Those last two segments are more heavily involved in the AI build-out and are putting in the majority of the work.

eMMC + UFS controller sales were up by approximately 30% to 35% sequentially, while the Ferri & Boot Drive solutions segment surged by 205% to 210% sequentially. The current AI boom and Micron numbers suggest that both segments will exhibit meaningful sequential growth when Silicon Motion Technology reports Q2 earnings.

As these parts of the business continue to achieve exceptional quarter-over-quarter growth rates, they will account for a larger share of total revenue and have a stronger influence on overall sales.

This setup implies that Silicon Motion Technology will have accelerated revenue growth in future quarters. It's worth noting that Micron said it has multiyear agreements that will "significantly enhance the durability and predictability of [the company's] strong financial performance."

That tidbit from the Q3 FY26 press release means this isn't just a cycle that's going away. The current memory boom still has multiple years of runway, which positions Silicon Motion Technology to benefit nicely.

Silicon Motion Technology's profit margins should continue to expand

While it's easy to focus on top-line growth, Silicon Motion Technology has a compelling opportunity to boost its profit margins. The company closed Q1 with a net profit margin of 19.5%. That's a respectable jump from the company's 17.2% net profit margin in Q4 2025.

In one year, Micron's net profit margin marched from 20.3% to 68.1%.

That's not to say Silicon Motion Technology ends up with a 68.1% net profit margin. However, the company is well positioned to achieve meaningful margin expansion, which investors may not be fully factoring in. Silicon Motion Technology needs a market cap of $110 billion or more to achieve a 10x return. That's a lot more feasible than Micron reaching a $12 trillion valuation.

Marc Guberti has positions in Silicon Motion Technology. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.