"Ceva’s Anchor is Wireless, But the Future is Edge AI"

Ceva Inc. (CEVA -5.66%) has climbed 56%, jumping last week after delivering robust earnings. The company reported Q4 revenue of $29.2 million, up 21% YoY, surpassing analyst forecasts of $27.5 million. Adjusted EPS grew 10% YoY to $0.11, in line with expectations.

Ceva develops chip designs for various applications, licensing them or receiving royalties from manufacturers. The company specializes in wireless technologies, including WiFi, Bluetooth, and cellular communications, but also designs chips for automotive and autonomous vehicle applications. The next major growth area, according to Ceva, is Edge AI—where AI processing happens directly on the device rather than the cloud, enabling faster performance.

While Ceva hasn’t disclosed the exact market size for Edge AI, it acknowledges the rapid expansion of this segment, which could become a dominant part of its business in the coming years. “Wireless remains our anchor, but Edge AI is the future,” Panush and Arieli tell us.

High Valuation Reflects Growth Expectations

Ceva’s stock has surged over the past year and now trades at a market cap of approximately $850 million. While the company doesn’t provide forward guidance, analyst estimates suggest EPS will grow from $0.53 this year to $0.91 in 2026, implying multiples of 68x and 40x, respectively—reflecting high investor expectations.

Despite these lofty valuations, Panush and Arieli express confidence in Ceva’s growth potential. Here’s what they had to say:

What were the key takeaways from the quarter and the full year?

Panush: “It was a highly successful year. We achieved 10% revenue growth while doubling our profit. Q4 also exceeded expectations, and today, we have a broad product portfolio in the market.”

What are Ceva’s primary product segments?

Panush: “We have two main product lines. The first is wireless communications—WiFi, cellular, Bluetooth. We strengthened our leadership in this space in 2024, acquiring a company to expand our market position. We expect to sign more deals and continue growing our leadership position.”

“The second area is Edge AI—running AI models directly on edge devices like smartphones. Initially, AI processing was centralized in hyperscale cloud providers, but now it’s shifting toward on-device processing. This is a massive market and a key growth engine for us in 2025-2026.”

עוד תכניות

How do revenues split within licensing and royalties?

Arieli: “We don’t disclose licensing revenue breakdowns, but we do for royalties. About $1.1 billion, nearly 50%, comes from Bluetooth—spanning automotive, mobile, and other devices. We’ve established a dominant position in this space and hit an all-time high in 2024. Bluetooth chips are relatively low-cost, but bundling them with WiFi—which has 2-3x higher royalties—unlocks additional revenue streams. Our WiFi royalties have grown more than 4x in the last two years, with potential to reach hundreds of millions in revenue. Today, WiFi is embedded in everything—even smart light bulbs.”

How significant is Edge AI for Ceva today?

Panush: “It’s already a core part of our business.”

Are you competing with giants like Nvidia and ARM?

Panush: “We always compete with large players. Nvidia provides GPUs, ARM provides CPUs, and we supply AI accelerators—so we don’t directly overlap with them. The market is expanding rapidly. While our core business remains wireless, Edge AI is undoubtedly our biggest growth driver.”

How does seasonality impact Ceva’s business?

Arieli: “Our business model is similar to ARM—we license IP and collect royalties on chip designs. Unlike ARM, we have exposure to wireless and AI. Both of us are influenced by consumer trends, with Q3 and Q4 typically stronger due to holiday demand in the US, Israel, and China. New industry standards—such as 5G+, 6G, or WiFi 7—can drive growth independent of seasonality. When a new standard is introduced, it directly boosts our business.”

How strong is Ceva in WiFi 6?

Panush: “We’re the clear leader, having signed licensing deals with over 40 companies. We’re in the early stages of volume ramp-up. Two years ago, 40 million WiFi units used our technology—today, that number is 180 million, with a large portion being WiFi 6. Most of our wireless growth in 2025-2026 will come from WiFi 6.”

What about WiFi 7?

Panush: “We already have WiFi 7 technology and began licensing it last year. We expect most new licensing deals in 2025-2026 to revolve around WiFi 7.”

How do new WiFi generations impact revenue?

Arieli: “Every new generation commands higher prices. What’s exciting about Ceva is that we now bundle multiple technologies—leading to larger contracts. Instead of selling individual IPs, we offer holistic solutions, which lets us charge higher fees. On the royalty side, newer, more advanced chips generate higher per-unit royalties.”

With Tesla and Lyft rolling out autonomous vehicles, how does Ceva fit in?

Panush: “Between 2025-2027, we expect significant growth in ADAS (Advanced Driver Assistance Systems). While these systems don’t make vehicles fully autonomous, they run AI models on-device, where we specialize. We expect royalties and shipments to begin this year and accelerate thereafter.”

Arieli: “Beyond autonomous driving, we’re deeply embedded in the automotive market. Our chips power wireless keys, vehicle-to-vehicle communication, noise-canceling audio systems (like Yamaha’s), and various automotive sensors. We’re not just in autonomy—we’re in multiple high-growth areas within the car industry.”

What are your thoughts on the DeepSeek trend?

Panush: “We ensure our chips can efficiently run DeepSeek models for customers. The broader trend is to shrink large models for on-device execution—which is exactly what we’ve been advocating. This lowers costs for AI adoption, making our licensing model even more valuable. It’s a highly favorable trend for us.”

How does currency volatility impact Ceva?

Arieli: “Almost all our revenue is in USD, so our top line is unaffected. On the cost side, our R&D centers in Israel (ILS) and Europe (EUR) introduce some currency risk, but we hedge several quarters ahead. Overall, a strong USD is beneficial for us.”

With $160M in cash, are acquisitions on the table?

Panush: “We’re comfortable but still exploring acquisitions. We even hired a dedicated M&A executive in Silicon Valley. The IP industry is tough for smaller firms, but we know how to integrate new technologies effectively. We remain focused on IP while expanding our Edge AI capabilities.”