The thesis

InterDigital operates in the software application space, benefiting from the AI buildout trend. The company's revenue growth is -13.4% year-over-year, with a gross margin of 78.66% and a net margin of 38.32%. Despite this, the analyst consensus rating is buy, with a conviction score of 39 out of 100. This discrepancy makes the setup interesting, with a potential disconnect between the company's current performance and its future prospects.

Why now

The current macro moment, with China's chip tool push and AI driving growth in Malaysia, makes InterDigital's position in the software application space compelling. With a DCF intrinsic value of $306, the company's valuation may be influenced by the ongoing AI buildout trend.

What to watch

Investors should monitor InterDigital's revenue growth and margin performance over the next few quarters to confirm or deny the thesis. The company's ability to capitalize on the AI buildout trend and navigate the risks associated with the US-China squeeze will be key indicators of its future success.

Key risks

Valuation risk is a concern, given the company's current price-to-earnings ratio of 26.1x. Execution risk is also a factor, as InterDigital must navigate the complex and competitive technology landscape. Additionally, macro risk posed by the US-China squeeze on chip technology could impact the company's growth prospects.

Theme exposure

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