GSI Technology, Inc.’s (NASDAQ:GSIT) 27% Share Price Plunge Could Signal Some Risk

GSI Technology, Inc. (NASDAQ:GSIT) shareholders won’t be pleased to see that the share price has had a very rough month, dropping 27% and undoing the prior period’s positive performance. Longer-term, the stock has been solid despite a difficult 30 days, gaining 15% in the last year.

Even after such a large drop in price, you could still be forgiven for feeling indifferent about GSI Technology’s P/S ratio of 3.8x, since the median price-to-sales (or “P/S”) ratio for the Semiconductor industry in the United States is also close to 3.9x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

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View our latest analysis for GSI Technology

NasdaqGS:GSIT Price to Sales Ratio vs Industry September 4th 2025 What Does GSI Technology’s Recent Performance Look Like?

The recent revenue growth at GSI Technology would have to be considered satisfactory if not spectacular. Perhaps the expectation moving forward is that the revenue growth will track in line with the wider industry for the near term, which has kept the P/S subdued. If not, then at least existing shareholders probably aren’t too pessimistic about the future direction of the share price.

We don’t have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on GSI Technology’s earnings, revenue and cash flow. Do Revenue Forecasts Match The P/S Ratio?

In order to justify its P/S ratio, GSI Technology would need to produce growth that’s similar to the industry.

Retrospectively, the last year delivered a decent 6.1% gain to the company’s revenues. However, this wasn’t enough as the latest three year period has seen an unpleasant 34% overall drop in revenue. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

In contrast to the company, the rest of the industry is expected to grow by 33% over the next year, which really puts the company’s recent medium-term revenue decline into perspective.

In light of this, it’s somewhat alarming that GSI Technology’s P/S sits in line with the majority of other companies. Apparently many investors in the company are way less bearish than recent times would indicate and aren’t willing to let go of their stock right now. Only the boldest would assume these prices are sustainable as a continuation of recent revenue trends is likely to weigh on the share price eventually.

The Key Takeaway

With its share price dropping off a cliff, the P/S for GSI Technology looks to be in line with the rest of the Semiconductor industry. Using the price-to-sales ratio alone to determine if you should sell your stock isn’t sensible, however it can be a practical guide to the company’s future prospects.

Our look at GSI Technology revealed its shrinking revenues over the medium-term haven’t impacted the P/S as much as we anticipated, given the industry is set to grow. When we see revenue heading backwards in the context of growing industry forecasts, it’d make sense to expect a possible share price decline on the horizon, sending the moderate P/S lower. If recent medium-term revenue trends continue, it will place shareholders’ investments at risk and potential investors in danger of paying an unnecessary premium.

Don’t forget that there may be other risks. For instance, we’ve identified 1 warning sign for GSI Technology that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.