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Raspberry Pi (LSE: RPI) is among the hottest development shares within the FTSE 350 index proper now. During the last week, it has jumped round 90%.
Now, I’m sitting on a pile of money in the meanwhile and in search of funding alternatives. Ought to I purchase shares on this under-the-radar British pc firm? Let’s talk about.
What’s it?
It’s been some time since I’ve coated Raspberry Pi. Actually, I haven’t written about it since shortly after its Preliminary Public Providing (IPO) in mid-2024.
As a reminder, the corporate designs and develops high-performance, low-cost single-board computer systems (SBCs). These are tiny, credit-card-sized computer systems constructed on a single circuit board which have a spread of functions and are sometimes utilized in colleges, universities, and laboratories.
Since its IPO, the corporate’s share value has been up and down. However largely down.
So, I didn’t really feel like I used to be lacking out on something not proudly owning the inventory. Till not too long ago…
As a result of within the final week or so, the share value has gone parabolic.
Why is the share value surging?
There are a few components behind this share value spike. The primary issue was a inventory buy from CEO Eben Upton.
On Monday (16 February), it got here to mild that he’d purchased 4,684 Raspberry Pi shares at a value of £2.82 per share. This deal was value about £13,200.
Notice that Upton has purchased inventory on various events this 12 months. I calculate that he’s spent round £150k on shares – a big amount of cash.
The second issue is speak on-line that the corporate might be a significant beneficiary of the AI growth. You see, folks have not too long ago been utilizing the corporate’s computer systems (which could be purchased for round £40) to run an AI digital assistant referred to as OpenClaw.
This is sort of a private AI agent that may be customised. It may entry your emails, textual content messages, and banking apps, and full complicated duties.
There are actually tons of movies on-line about tips on how to run OpenClaw on a Raspberry Pi pc. So, this has created lots of investor curiosity.
You could possibly additionally say there’s been a little bit of ‘meme inventory’ value motion right here. In current days, lots of sizzling cash has flowed into the inventory on the again of chatter on social media.
Ought to I purchase now?
Will I purchase the inventory? Not proper now.
I do suppose there’s potential for robust income development within the years forward. Particularly if the corporate’s merchandise stay in concentrate on social media.
Nonetheless, one problem that considerations me is reminiscence shortages/costs. In a current buying and selling replace, the corporate mentioned that the price of the LPDDR4 DRAM utilized in lots of its merchandise has “elevated quickly” in current months, with some main suppliers now indicating limitations of provide at excessive densities.
This problem may probably hit earnings. It may additionally constrain development.
Notice that the corporate mentioned that it has enough LPDDR4 stock for H1 2026. However trying past that, there’s uncertainty.
One other problem is the valuation. After the current share value spike, the forward-looking price-to-earnings (P/E) ratio is about 50.
That’s excessive for a {hardware} firm. It doesn’t depart any room for error.
So, I’m going to depart the inventory on my watchlist for now. However different Fools could also be extra bullish.
