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In theory, the market for small, cheap computers should be saturated. Most hobbyists who want them already have several. Older models are fine for retro gaming and tinkering, while industrial buyers don’t often need upgrades. Yet shares in Raspberry Pi, a Cambridge-based maker of simple devices on single circuit boards, shot up this week.
The reason, ostensibly, was a burst of enthusiasm from AI hobbyists playing with OpenClaw, a personal assistant that runs on a home computer. This new embodiment of AI efficiency can perform all kinds of useful tasks, managing email, calendars and chat apps, but its many security vulnerabilities mean users often run it on separate, cheap hardware.
Hence the surge in excitement and the birth of what looks like a new UK meme stock. After rising roughly a quarter on Tuesday, Raspberry Pi was valued at a juicy price-to-earnings multiple of about 44 times, rich for a hardware company. Dell Technologies trades at about 10 times, according to LSEG. The day before its shares were ignited by a viral stock-picker post on X, Raspberry Pi had already been trading at 30 times.
In fairness, Raspberry Pi has more substance than some former retail-investor darlings. For example, assume the pre-surge earnings multiple was fair. To justify the £220mn of market capitalisation that the company added on Tuesday, it would need to make roughly £7.3mn of extra earnings, which Lex calculates would involve selling 1.6mn more devices a year, assuming costs including wages and marketing stayed steady. That’s just under a quarter of its current level of annualised sales — which is a lot but not implausible.
What if that 30 times was already too much? If a fairer comparison were Dell’s 10 times earnings, the company would need to sell about 5mn additional boards a year, a 70 per cent increase from now. That’s a stretch, though over a few years may be possible.
The question, then, is whether the company could satisfy such demand. Raspberry Pi could, at most, produce roughly 12mn units. But it faces competition for suddenly scarce resources. Samsung, SK Hynix and Micron are shifting capacity from older memory chips to newer varieties beloved of AI “hyperscalers”. The spot price of old DDR4 chips has at times hit quadruple that of the newer DDR5, analysts at Peel Hunt reckon.
Raspberry Pi at least has enough DDR4 supply to meet near-term demand. About a third of its boards either use older chips or don’t use dynamic random-access memory, or DRam, at all. It has started making its own semiconductors, too. It remains true that the OpenClaw phenomenon could run out of momentum. But for AI believers rushing to “go short” on software, wealth managers and even trucking, going long tiny computers isn’t a bad strategy.
gaia.freydefont@ft.com
