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GSIT Stock Slides 12% as Q2 Loss Widens Y/Y on Rising Costs
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Shares of GSI Technology, Inc. (GSIT - Free Report) have declined 12.4% since the company reported its earnings for the quarter ended Sept. 30, 2026, compared with the S&P 500 Index’s 1.7% decline over the same period. Over the past month, the stock has lost 29.1%, underperforming the S&P 500’s 4.1% decline.
GSI Technology incurred a second-quarter fiscal 2027 loss of 18 cents per share, wider than a loss of 11 cents per share in the prior-year quarter.
Revenues of $6 million denoted a 6.6% decline from $6.4 million in the year-ago quarter.
Net loss widened to $7 million from $3.2 million a year earlier. The weaker results reflected lower gross margins and increased operating expenses related to product development and non-recurring professional fees.
GSI Technology, Inc. Price, Consensus and EPS Surprise
Gross margin contracted to 48.5% from 54.8% a year earlier. The figure also fell below management's guidance of 53-55%, reflecting unfavorable product mix and higher manufacturing costs.
Total operating expenses increased 54.1% year over year to $10.4 million. Research and development expenses climbed to $6.1 million from $3.8 million, primarily due to external design services associated with the next-generation Plato processor.
Selling, general and administrative expenses rose to $4.3 million from $3 million. Operating loss widened to $7.4 million from $3.2 million a year earlier.
Military and defense customers accounted for 46.7% of quarterly shipments, compared with 28.9% in the year-ago period.
KYEC contributed $1.2 million, representing 19.7% of revenues, compared with $0.8 million, or 12.4%, a year earlier. Nokia contributed $0.4 million, up from $0.2 million.
GSIT's Cash Flow and Balance Sheet
GSI Technology ended Sept. 30, 2026, with cash and cash equivalents of $69.2 million, compared with $67.2 million at March 31, 2026.
Total assets increased to $101.5 million from $98 million.
Working capital increased to $73.8 million from $70 million at March 31, 2026.
Stockholders' equity increased to $86.2 million from $81.8 million over the same period.
Management indicated that the company remained debt-free, providing financial flexibility to support its commercialization initiatives.
Net cash used in operating activities totaled $8 million during the quarter.
GSIT's Management Commentary and Business Developments
Chief executive officer Lee-Lean Shu highlighted progress in the Smart Guardian Eye project in Taiwan, where the initial stage of Phase I received government acceptance. The system is now providing live AI video monitoring and incident reporting.
Management is preparing a proposal for Phase II, which could expand the deployment from approximately 20 cameras to roughly 80 cameras and introduce automatic speech recognition capabilities.
The company also advanced its AI-assisted software development kit, GRINN, designed to simplify adapting existing AI models to its associative processing unit platform.
Management expects the software to support broader customer evaluations and accelerate Gemini-II commercialization.
Plato development remains on schedule, with management targeting tape-out in March 2027. Initial chip sampling is expected by late summer 2027.
Factors Influencing GSIT's Performance
Supply-chain constraints affecting wafers, outsourced assembly and testing increased manufacturing costs and extended lead times.
Management noted that inventory shortages prevented the fulfillment of certain customer orders, contributing to weaker quarterly revenues.
Operating expenses were also affected by approximately $2 million in non-recurring legal and professional fees associated with an internal assessment of vendor matters in foreign operations. A $0.6 million vendor settlement gain partially offset these expenses.
Management does not anticipate significant additional expenses related to the assessment.
GSIT's Fiscal Q3 Outlook
For the third quarter of fiscal 2027, management expects revenues of $5-$6 million and gross margin of approximately 38-40%.
To address rising manufacturing costs, GSI Technology plans immediate price increases on new orders and increases effective Jan. 1, 2027, for existing backlog.
Management anticipates that pricing adjustments and improved product availability will support revenue and gross margin recovery beginning in the fourth quarter of fiscal 2027.
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GSIT Stock Slides 12% as Q2 Loss Widens Y/Y on Rising Costs
Shares of GSI Technology, Inc. (GSIT - Free Report) have declined 12.4% since the company reported its earnings for the quarter ended Sept. 30, 2026, compared with the S&P 500 Index’s 1.7% decline over the same period. Over the past month, the stock has lost 29.1%, underperforming the S&P 500’s 4.1% decline.
GSI Technology incurred a second-quarter fiscal 2027 loss of 18 cents per share, wider than a loss of 11 cents per share in the prior-year quarter.
Revenues of $6 million denoted a 6.6% decline from $6.4 million in the year-ago quarter.
Net loss widened to $7 million from $3.2 million a year earlier. The weaker results reflected lower gross margins and increased operating expenses related to product development and non-recurring professional fees.
GSI Technology, Inc. Price, Consensus and EPS Surprise
GSI Technology, Inc. price-consensus-eps-surprise-chart | GSI Technology, Inc. Quote
GSIT's Other Key Financial Metrics
Gross margin contracted to 48.5% from 54.8% a year earlier. The figure also fell below management's guidance of 53-55%, reflecting unfavorable product mix and higher manufacturing costs.
Total operating expenses increased 54.1% year over year to $10.4 million. Research and development expenses climbed to $6.1 million from $3.8 million, primarily due to external design services associated with the next-generation Plato processor.
Selling, general and administrative expenses rose to $4.3 million from $3 million. Operating loss widened to $7.4 million from $3.2 million a year earlier.
Military and defense customers accounted for 46.7% of quarterly shipments, compared with 28.9% in the year-ago period.
KYEC contributed $1.2 million, representing 19.7% of revenues, compared with $0.8 million, or 12.4%, a year earlier. Nokia contributed $0.4 million, up from $0.2 million.
GSIT's Cash Flow and Balance Sheet
GSI Technology ended Sept. 30, 2026, with cash and cash equivalents of $69.2 million, compared with $67.2 million at March 31, 2026.
Total assets increased to $101.5 million from $98 million.
Working capital increased to $73.8 million from $70 million at March 31, 2026.
Stockholders' equity increased to $86.2 million from $81.8 million over the same period.
Management indicated that the company remained debt-free, providing financial flexibility to support its commercialization initiatives.
Net cash used in operating activities totaled $8 million during the quarter.
GSIT's Management Commentary and Business Developments
Chief executive officer Lee-Lean Shu highlighted progress in the Smart Guardian Eye project in Taiwan, where the initial stage of Phase I received government acceptance. The system is now providing live AI video monitoring and incident reporting.
Management is preparing a proposal for Phase II, which could expand the deployment from approximately 20 cameras to roughly 80 cameras and introduce automatic speech recognition capabilities.
The company also advanced its AI-assisted software development kit, GRINN, designed to simplify adapting existing AI models to its associative processing unit platform.
Management expects the software to support broader customer evaluations and accelerate Gemini-II commercialization.
Plato development remains on schedule, with management targeting tape-out in March 2027. Initial chip sampling is expected by late summer 2027.
Factors Influencing GSIT's Performance
Supply-chain constraints affecting wafers, outsourced assembly and testing increased manufacturing costs and extended lead times.
Management noted that inventory shortages prevented the fulfillment of certain customer orders, contributing to weaker quarterly revenues.
Operating expenses were also affected by approximately $2 million in non-recurring legal and professional fees associated with an internal assessment of vendor matters in foreign operations. A $0.6 million vendor settlement gain partially offset these expenses.
Management does not anticipate significant additional expenses related to the assessment.
GSIT's Fiscal Q3 Outlook
For the third quarter of fiscal 2027, management expects revenues of $5-$6 million and gross margin of approximately 38-40%.
To address rising manufacturing costs, GSI Technology plans immediate price increases on new orders and increases effective Jan. 1, 2027, for existing backlog.
Management anticipates that pricing adjustments and improved product availability will support revenue and gross margin recovery beginning in the fourth quarter of fiscal 2027.