Vicor's Selloff Leaves AI Story Intact; Valuation Still Not Attractive

What happened

Vicor's stock has pulled back sharply from its June high of $379.8 to $214.7, but the underlying AI power-delivery demand remains robust, as evidenced by Q2 2026 revenue of $143.4M, up 26.9% sequentially, and a backlog of $380M. The company is aggressively expanding capacity by 5x, with early accretion expected from H2'27, and continues to benefit from competitors' Vertical Power Delivery patent infringement, supporting licensing tailwinds with OEMs and hyperscalers. However, the recent selloff has not yet brought the stock to a level that offers a margin of safety, as it still trades at 70.9x earnings and 80.9x EV/EBITDA. Royalty revenue, which spiked to $30.4M in Q2, remains usage-based and potentially lumpy, and the lack of a committed second-fab timeline keeps shipment growth constrained. The Seeking Alpha article's initiation of a Hold aligns with our existing WAIT rating, confirming that while the AI story is real, current valuation already prices in much of the upside.

Implication

Investors should avoid adding to positions at current levels because the stock still embeds high expectations for AI adoption, royalty durability, and timely capacity expansion. Key near-term catalysts to monitor include Q3 2026 royalty revenue (must stay near $25M), backlog stability above $350M, and a dated second-fab plan by late 2026. A move to POTENTIAL BUY would require shares to trade near the $175 attractive entry level or management to provide concrete evidence that royalties and capacity are on track. Conversely, a break below $200 on weak royalties or backlog stagnation would signal that the market is repricing the growth story more severely. For now, the risk/reward is balanced, and patience is warranted.

Thesis delta

No material shift in thesis. The Seeking Alpha article echoes our existing WAIT rating and conviction of 4, reinforcing that the AI-growth narrative is intact but not yet sufficiently priced for fresh buying. We maintain our attractive entry at $175 and trim level at $260, with no change to scenario probabilities or catalysts.