It’s true that in the UK, we don’t have a huge amount of tech shares to get excited about. Most flourish across the pond in Silicon Valley and are listed over there. Yet there are some FTSE stocks in the tech space that are worth considering. Here’s one that went public less than a year ago that I think has good potential.
The long story short
I’m talking about Raspberry Pi (LSE:RPI). It was actually founded as a charity back in 2008, with the aim of developing an affordable computer to encourage young people to learn programming and computing. After launching the first model back in 2012, things took off, with over 50m unit sales around the world.
It now has a broader range of products, including compute modules, accessories and semiconductors. Commercially, it’s doing well, especially after listing on the stock market in June last year. The latest half-year report “was stronger than we had previously expected”, with gross profit of $34.2m for the period.
The IPO price was set at 280p, with it currently trading at 718p. Clearly, investors are excited about its prospects.
What the future could hold
The business commented in an update that “the market opportunity for Raspberry Pi products is substantial, with a total addressable market across the Industrial & Embedded and Environmental & Education markets estimated at $21.2bn in 2023.”
Of course, Raspberry Pi will never have a complete monopoly on this market. Yet it goes to show the revenue potential for the future. With a current market cap of $1.67bn, there’s clearly room for the stock to increase in value substantially.
Further, the business is continuning to diversify the product offering. This bodes well for the future, especially with AI potential. Should the business look to develop specific processors for more high-end AI use, it could open up a much large market.
Don’t get confused
Even though I think this is a great tech stock for future growth, it’s important not to get confused. I’ve seen some people compare this with Nvidia. Yet Nvidia focuses on making high-performance computing chips, whereas Raspberry Pi is in the low-cost and DIY space. Nvidia chips are much more powerful and as a result, the company serves a different set of clients.
This doesn’t mean that Raspberry Pi stock can’t rally a lot in the future, but I don’t see it copying the extreme surge that we’ve seen in Nvidia stock over the past couple of years.
One risk going forward is that cheaper alternatives pop up from China. This could erode the market share for the company and pressure profit margins.
Ultimately, I really like the stock and am seriously thinking about buying it. Both the short and long-term growth potential is there, for a company that could become a UK tech darling.
