This Memory Sector Sleeper Stock Nears a Profitability Turning Point

Memory stocks have been driving markets this year, as demand soars for memory and storage chips to support the massive build-out of artificial intelligence (AI) infrastructure.

Many investors are familiar with the big names in the memory space, like Micron (NASDAQ: MU), Sandisk (NASDAQ: SNDK), Western Digital (NASDAQ: WDC), and Seagate (NASDAQ: STX). They have all put up eye-popping triple-digit returns this year.

There are also some emerging, smaller players in the space worth knowing about. One of them is Everspin Technologies (NASDAQ: MRAM), a niche player that is nearing a turning point in profitability.

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Meet Everspin Technologies

Everspin makes magnetoresistive random access memory (MRAM) chips, which the company describes as memory chips for mission-critical applications. The chip is constructed with magnetic spin technology rather than traditional electrical charge, which is designed to make it more durable and better able to handle extreme conditions. It features permanent storage technology combined with the speed of dynamic RAM.

MRAM chips are niche because they are targeted for military, aerospace, industrial, medical, energy, automotive, and other high-pressure applications where "failure is not an option." The chips are more expensive than your typical memory and storage chips and have lower capacity, but are valued for their permanent storage, speed, and durability.

Last quarter, this small-cap stock, with a market cap of $400 million, posted a net loss of $3.6 million, or $0.15 per share, despite record revenue of $18.7 million, which soared 42% year over year.

What pushed Everspin into a net loss was $4 million in legal fees, which increased operating expenses to $14.5 million -- 66% more than the same quarter a year ago. The litigation expenses are for a legal challenge waged by the U.S. International Trade Commission (ITC) over patent infringement claims following a complaint by Avalanche Technology.

The company expects a similar hit to legal expenses in the current quarter, as reflected in its outlook for fiscal Q3. The Q3 outlook calls for revenue in the range of $19.5 million to $20.5 million and a net loss of $0.05 to $0.10 per share.

The legal expenses could drag into the second quarter of 2027 as these ITC disputes are typically settled 14 to 16 months from the filing date, which in this case was Jan. 28, 2026.

Positive momentum

In the second quarter, the company announced a $40 million contract for its chips from a U.S. defense program spanning multiple years.

The company also inked a strategic partnership with Teledyne (NYSE: TDY) "to accelerate adoption of Everspin's MRAM in aerospace, defense, and other demanding systems."

In this partnership, Teledyne will offer Everspin's 256 MB Persyst chip technology as part of its memory products portfolio for military and aerospace customers.

Management expects that these and other agreements will help it meet its goal of $100 million in revenue by fiscal 2029. That would be up from $55 million at the end of last fiscal year, representing a 15% compound annual growth rate.

Once the drag of these legal fees concludes, combined with the sales momentum, Everspin should see profitability head north.

Dave Kovaleski has positions in Micron Technology. The Motley Fool has positions in and recommends Micron Technology, Teledyne Technologies, and Western Digital. The Motley Fool has a disclosure policy.