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Artificial intelligence (AI) continues to transform industries across the board, with a growing range of tools reaching mainstream adoption. Among them is Seedance 2.0, a product from ByteDance (the parent company of TikTok) that allows users to generate high-quality videos from simple prompts — work that would traditionally require studio budgets in the millions. It removes many barriers to entry for people who want to create their own films, which could give Hollywood a run for its money in a few years.
That’s just one example of how AI is reshaping industries, but a range of essential components make this technology possible. While AI chips have dominated headlines in recent years, SSD controllers — such as those developed by Silicon Motion Technology (NASDAQ: SIMO) — also play a critical role in supporting AI infrastructure.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
Silicon Motion Technology produces solid-state drives (SSDs), which act as the foundation for memory storage. AI chips can be overworked and create bottlenecks in AI training and inference if they don’t have sufficient memory capacity. Silicon Motion Technology addresses this problem, and tech companies that want zero hiccups with their AI expansion will need more SSDs moving forward.
AI workloads will only get more intense from here, especially with Seedance 2.0 and OpenAI’s Sora 2, both of which let users create detailed videos with prompts. Videos require a lot more space than simple text responses, increasing demand for memory storage solutions.
Silicon Motion Technology has a similar business model to Micron (NASDAQ: MU). Both rely on the memory storage market, but Micron is more diversified. However, the long-term opportunity may be greater for Silicon Motion Technology, which has a market cap of only $4.5 billion compared to Micron’s $482 billion. A smaller market cap means Silicon Motion Technology doesn’t require as much capital to double from current levels as Micron does.
Micron has become a standout with a 349% return over the past year. It’s harder to call Micron a hidden gem at this point, but Silicon Motion Technology still has that distinction despite more than doubling over the past year.
When a company establishes itself as an important part of the AI boom, revenue growth can compound rapidly. Investors saw that with Nvidia as the AI chipmaker turned into the world’s most valuable publicly traded corporation. Micron and Palantir (NASDAQ: PLTR) are recent winners, and Silicon Motion Technology looks poised to join them.
The SSD provider’s revenue increased by 15% sequentially in Q4 2025, with sales up by 46% year over year. This success also came with net income more than doubling year over year. SSD controller sales and SSD solution sales did the heavy lifting, and as these segments become a larger percentage of total revenue, the company’s growth should continue to accelerate.
Silicon Motion Technology’s 2026 outlook implies that revenue and profits will continue to accelerate. The company cited a strong backlog when giving its guidance.
Before you buy stock in Silicon Motion Technology, consider this:
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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.
1 Top Artificial Intelligence Stock to Buy Right Now was originally published by The Motley Fool
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