UBS has initiated coverage of CEVA with a Buy rating and a $27 price target, noting that the semiconductor IP provider’s growth outlook is not fully reflected in its valuation.
The firm pointed to CEVA’s strong position in connectivity intellectual property and an emerging opportunity in edge AI computing. CEVA supplies IP for wireless technologies such as Wi-Fi and Bluetooth while building a newer revenue stream tied to neural processing units.
“CEVA's core wireless/connectivity franchise (~70% market share) should continue to benefit from the growing number of connected Edge AI devices,” the analysts wrote.
They added that the company’s AI compute portfolio could drive a sharp royalty acceleration, forecasting growth from a 2% decline in calendar 2025 to about 20% growth by 2027 as royalties expand to more than triple per chip.
UBS said CEVA currently trades at what it views as an unjustified discount to other IP peers and expects the valuation gap to narrow as AI-related revenues scale.
About 70% of CEVA’s revenue comes from its wireless IP business, a segment historically pressured by handset modem declines.
However, UBS believes the business is at an inflection point as deployments broaden beyond smartphones into IoT, automotive, industrial and consumer edge devices, where higher performance requirements are increasing IP content per device.
“Additionally, Apple’s potential modem insourcing represents a medium-term tailwind,” the analysts wrote.
UBS estimates that if Apple transitions roughly 70% of its fall 2026 lineup to internally designed modems, CEVA could see more than $10 million in additional royalty revenue in 2027.
UBS also highlighted CEVA’s large installed base — roughly 2 billion devices shipped annually — as a foundation for cross-selling sensing, sensor fusion and AI inference technologies. As AI workloads shift toward the edge, demand for system-level inference should rise, expanding CEVA’s addressable market beyond its traditional digital signal processor roots.
“We see 2025 NPU licensing agreements (including MCHP and NextChip) translating into royalties as early as 2027,” the analysts wrote.
Over time, UBS expects the sensor and inference opportunity to outgrow the core wireless business and represent about 40% of revenue by 2030.
The firm flagged risks including potential weakness in the lower-end smartphone market in 2026, foreign exchange pressure on operating expenses, competition from Arm in NPUs and geopolitical exposure, noting China accounts for roughly 49% of CEVA’s revenue.
Shares of CEVA moved higher on the report, adding 5.3% at about $21 on Wednesday afternoon.