Vicor Stock Is Overvalued at 21.88X EV/Sales: Should You Still Buy It?

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Is Vicor worth buying at current prices? Let us dig deep to find out.

VICR Shares Ride on AI Prospects

Year to date (YTD), Vicor shares have outperformed the broader Zacks Computer and Technology sector, as well as Monolithic Power Systems, Analog Devices and Texas Instruments. Vicor returned a whopping 114.2% YTD while the broader sector, Monolithic Power Systems, Analog Devices and Texas Instruments have returned 18.9%, 54.7%, 43.6% and 61.1%, respectively.

Vicor Stock’s Price Performance

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VICR’s sharp YTD appreciation has been supported by a combination of stronger operating momentum, rapidly improving demand visibility and increased confidence in its AI-related power-delivery opportunity. On a year-over-year basis, first-half 2026 revenues increased 35% to $256.3 million.

More importantly for investor sentiment, backlog reached roughly $380 million, up 26% sequentially and 145% year over year, while book-to-bill remained above 1. Vicor attributed the backlog strength largely to rising product demand rather than the new license agreement, highlighting strength across high-performance computing, automatic test equipment, industrial, and aerospace and defense markets. 

The new licensing agreement materially strengthened the recurring royalty narrative. In the second quarter of 2026, royalty revenues reached $30.4 million compared with $10.4 million in the year-ago quarter, with the latest agreement expected to contribute $5 million in third-quarter 2026 and $10 million per quarter for the subsequent four quarters.

Vicor consequently raised its outlook to more than $600 million of 2026 revenues and expects nearly 10% sequential revenue growth in third-quarter 2026, reinforcing expectations that the current demand upcycle has further room to run.

VICR’s Prospects Ride on AI-Related Demand

Vicor benefits from its exposure to the increasing power-density requirements of AI accelerators and high-performance computing systems. The company believes that first-generation vertical power delivery solutions are increasingly constrained by insufficient current density and current gain, while Vicor’s second-generation VPD architecture is targeting current densities of up to 5 amps/mm² with current gain above 40.

The company has completed an initial 3 amps/mm² chipset for its lead customer, and is developing demonstration systems for additional customers and expects to push beyond 4 amps/mm² around late 2026 or early 2027. VICR expects engagement with additional hyperscalers and OEMs through 2026, with some programs potentially evolving into production ramps around late third-quarter 2027 or fourth-quarter 2027.

A second structural driver is the combination of product sales and IP licensing, which could increase revenue scale and margin potential. Vicor has set long-term objectives of $2.5 billion in revenues, a 70% gross margin and a 40% operating margin compared with its previous targets of $1 billion and 65%, with management describing licensing and power-module sales as mutually reinforcing businesses. Vicor already has multiple OEM licensees and one hyperscaler licensee, while management expects licensing income to expand materially over time as OEMs and hyperscalers increasingly address Vicor’s IP portfolio.

Capacity expansion is another important enabler. Demand is already absorbing additional capacity at Vicor’s first vertically integrated ChiP fab, and management said that the facility is approaching full utilization. Vicor is therefore pursuing a second fab; management indicated that the initial phase would roughly double capacity, while potential sites could ultimately accommodate two to three times the capacity of the first fab. This expansion is critical to achieving the $2.5-billion revenue objective and should provide room to support AI customers as Gen2 VPD adoption develops.

Vicor’s 2026 Earnings Estimate Revision Shows Rising Trend

The Zacks Consensus Estimate for 2026 earnings is pegged at $3.12 per share, up 6.1% over the past 30 days, suggesting 19.54% growth from the 2025 reported figure.

The consensus mark for third-quarter 2026 earnings is pegged at 71 cents per share, down by four cents over the past 30 days and indicating 12.7% growth from the figure reported in the year-ago quarter.

Conclusion

Vicor’s premium valuation leaves limited room for execution missteps, but the company’s improving fundamentals and expanding AI opportunity provide meaningful support for the stock. Robust backlog growth, rising royalty revenues, strengthening demand across high-performance computing markets and continued progress with its next-generation VPD technology position Vicor well for sustained growth.

Although the stock’s strong YTD rally and elevated valuation may warrant some near-term caution, Vicor’s growing exposure to AI infrastructure, expanding licensing opportunity and planned capacity additions strengthen its long-term growth prospects. Investors willing to tolerate valuation-related volatility may consider VICR an attractive stock to hold for continued participation in the AI-driven power-delivery opportunity.

Vicor currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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