Chip shortage

Semiconductor (chip) shortages for CPUs and graphics cards has meant that Corsair has struggled to keep up with demand for its high end products. However, the outlook is improving.

Advanced Micro Devices (NASDAQ: AMD) is a key microchip supplier to Corsair. During the pandemic, it had to prioritise core computing services over high end gaming. However, last month its CEO Lisa Su stated that there would be “more output every quarter,” with supply issues likely to be resolved in 2022. 

This represents both risk and reward for Corsair Gaming. Its CEO thinks there’s “a huge amount of people waiting in the wings to build, as these cards start to become available.” The risk of course is that the chip shortage takes longer to resolve. Global car makers as well as Apple have had to cut production drastically. Sony‘s flagship console, the PlayStation 5, has become almost impossible to buy. And there’s no guarantee that the chip shortage will be resolved within the year.

Corsair Gaming risks

The company has come under fire over equality issues. There’s only one woman on the board, Diana Bell, who previously worked as Senior Vice President at Hewlett Packard (NYSE:HPQ). Corsair may face backlash from alienated female gamers who could choose to take their custom elsewhere. As the pandemic concludes, it’s also possible that consumers may be less likely to game. And the high short interest means most hedge funds are betting against the company.

However, with an estimated 2021 price-to-earnings (P/E) ratio of only 16, Corsair Gaming is a high potential growth stock I’d add to my portfolio.