Rambus shares crater after revenue miss, Baird warns of DRAM supply squeeze

Rambus Inc (NASDAQ:RMBS) shares plunged astir 23% to astir $109.63 connected Tuesday aft the semiconductor intelligence spot institution reported first-quarter 2026 results that fell abbreviated of gross expectations, compounded by an expert downgrade citing mounting risks from tightening DRAM supply.

The institution posted Q1 gross of $180.2 million, missing the statement estimation of $189.71 million, portion adjusted net per stock came successful astatine $0.63, a hairsbreadth beneath the $0.64 forecast.

Product gross reached $88 million, up 15% year-over-year, portion royalties totaled $69.6 cardinal and declaration and different gross came successful astatine $22.6 million.

For the 2nd quarter, Rambus guided licensing billings of $76 cardinal to $82 million, royalty gross of $72 cardinal to $78 million, merchandise gross of $95 cardinal to $101 million, and declaration and different gross of $19 cardinal to $25 million, with a diluted stock number of 110 million.

Adding to the pressure, Baird downgraded the banal to Neutral, citing a increasing hazard of slowing RDIMM portion maturation heading into 2027 driven by deepening DRAM proviso constraints. The steadfast noted that portion the acceleration successful x86 CPU request fueled by inferencing and agentic AI is simply a affirmative request awesome for Rambus, the company's volume-driven concern exemplary leaves it exposed erstwhile representation proviso tightens.

"Rambus is the classical lawsuit of a unit-driven top-line impacted astatine times of terrible representation shortages without the payment of higher pricing," Baird wrote, adding that companies controlling their ain capableness and benefiting from pricing powerfulness thin to maximize gross and net leverage successful specified environments, portion volume-driven players look headwinds erstwhile proviso is constrained.

Baird flagged that the bulk of caller DRAM capableness coming online is expected to beryllium directed toward high-bandwidth memory, oregon HBM, leaving accepted RDIMM proviso progressively strained. The steadfast modeled RDIMM portion maturation of 20% successful 2026, slowing to 12% to 15% successful 2027. It besides noted that surging DRAM pricing could measurement connected MRDIMM volumes, and that Google's ramp of CXL exertion represents a further headwind.

Industry-wide DRAM spot maturation is expected to scope lone astir 23% successful 2027, perchance slowing further to hardly 20% successful 2028.

Baird besides pointed to softening merchandise gross momentum, noting that second-quarter merchandise gross guidance implies maturation of conscionable 1% versus the 4th fourth of 2025, compared with 11% maturation implicit the aforesaid play a twelvemonth earlier, with the steadfast expecting year-over-year merchandise gross comparisons to decelerate done the remainder of 2026 and into 2027 absent caller merchandise introductions.

Despite the downgrade, Baird maintained its terms people of $120 and described Rambus arsenic 1 of the highest-quality names wrong its small-cap coverage.