Ubiquiti Inc. (UI): A Bull Case Theory

We came across a bullish thesis on Ubiquiti Inc. on WorldlyInvest's Substack. As of 2ⁿᵈ July, Ubiquiti Inc.'s share was trading at $411.72. UI's trailing and forward P/E were 45.24 and 40.36, respectively according to Yahoo Finance.

The thesis on UI argues that the market is materially underestimating the company's growth prospects and brand strength in a highly commoditized networking equipment industry. Ubiquiti operates with a highly differentiated business model, selling direct-to-consumer via online channels and an engaged user community.

The networking industry is entering a major global upgrade cycle driven by U.S. fiber expansion, European fiber push, and 5G expansion. UI is uniquely positioned for this cycle, with products dominating remote areas and SMB markets.

The analyst estimates UI's TAM is ~$246B, with enormous whitespace in Asia. The company has compounded revenue at ~26% CAGR since 2009, and runs at industry-leading efficiency. The base case projects 17.5% CAGR through 2027, with upside from Asia expansion and rising U.S./EU upgrade cycles.

While this is our first coverage on Ubiquiti Inc., we’ve recently examined a bullish thesis on another stock in the same Communication Equipment industry that sheds light on similar long-term dynamics. In contrast to CSCO, which is poised to benefit from the AI-driven energy infrastructure supercycle and onshoring boom driven by tariffs, Ubiquiti Inc. (UI) is well-positioned to capitalize on the global upgrade cycle in the networking industry. Both companies operate in the Communication Equipment space, but their strategies diverge; CSCO is focused on providing critical energy infrastructure assets to power AI growth, while UI leverages its highly differentiated business model, selling directly to consumers via online channels and an engaged user community. Despite these differences, both companies are poised to benefit from significant trends in their respective markets, with CSCO riding the tailwinds of AI, tariffs, and nuclear energy, and UI dominating remote areas and SMB markets with its products.

UI isn't on our list of the 30 Most Popular Stocks Among Hedge Funds. While we acknowledge the risk and potential of UI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.