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Stock Analyst Update

Are Investors Chasing a Storm with Rambus?

The chipmaker's outlook is still cloudy.


Rambus (RMBS) scored big when Toshiba and Hitachi (HIT) agreed to pay the firm royalties for its computer-chip technology. But after investors have frenzied over the stock for the past two weeks, it has caveat emptor written all over it.

The agreements are significant because Rambus' claim to these royalties has been the subject of much debate. Rambus asserts its patents go much further than its own proprietary memory chips, called RDRAM, or Direct Rambus Dynamic Random Access Memory. For some time, RDRAM has been expected to become the de facto standard for computer memory because of its superior performance relative to other current and emerging DRAM standards.

Jeremy Lopez does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.