The Stock That Was Supposed to Stay Dead
Every bull market produces one company that becomes the morality tale. The name people bring up when they want to sound prudent. “Sure, AI is real, but remember what happened to...”
For the AI infrastructure trade, that company got its scarlet letter in February 2025.
The setup was almost cruel. This mid-sized chipmaker had spent two brutal years digging out from under a disastrous acquisition, a $1.2 billion deal that loaded the balance sheet with debt right as the business it bought fell apart. The stock had been to the brink. Then, salvation: a new product caught the AI wave. Its chips were going to sit inside the copper cables connecting Nvidia’s most advanced racks. The stock roughly quadrupled on the story.
And then, in one filing, the company admitted the marquee opportunity was shrinking. Rack designs had changed. The big customer’s architecture moved on. The stock lost about a third of its value in days, lawyers started circling, and the market filed the whole thing under “AI casualty.” Case closed.
Except somebody forgot to tell the business.
On Monday evening, that same company reported the best quarter in its history. Revenue up 33%. Data center revenue up 91%, to a record. Adjusted earnings up 73%. Then the part that made trading desks sit up straight: guidance for the current quarter of $410 million in revenue against a Wall Street consensus of $360 million, with earnings guided to $1.05 a share against a consensus of $0.73.
Read those numbers again. Companies beat consensus by pennies. This management team just told the Street its earnings estimate for the quarter already in progress was too low by 44%.
The stock jumped 10% yesterday on ten million shares, its heaviest accumulation day in months. Five analysts raised their targets within a day. One firm lifted its target from $225 to $300 this morning. Another has gone from $102 to $220 in the span of two weeks.
And yet, even after all that, the stock still sits 21% below the high it touched in late June. The market is acting like it hasn’t fully decided whether it’s allowed to believe this story again.
That hesitation is the opportunity.
But here’s where it gets interesting, because the quarter itself is the least important part. What actually changed is the structure of the entire company, and the market is only pricing the quarter.
