SkyWater Technology, Inc. (SKYT): A Bull Case Theory

We came across a bullish thesis on SkyWater Technology, Inc. on Danny’s Substack by Danny Green. In this article, we will summarize the bulls’ thesis on SKYT. SkyWater Technology, Inc.'s share was trading at $28.74 as of February 18th. SKYT’s trailing and forward P/E were 11.20 and 185.19 respectively according to Yahoo Finance.

SkyWater Technology, Inc., together with its subsidiaries, operates as a pure-play technology foundry that offers semiconductor development, manufacturing, and packaging services in the United States. SKYT is pursuing an ambitious growth trajectory, with revenue rising from about $342 million in 2024 to a targeted $600 million+ by 2026 following the Fab 25 acquisition, and a plausible path toward $1.7 billion or more by 2035 if it successfully dominates the U.S. “Trusted” foundry niche for quantum and biotechnology applications.

While current revenue remains lumpy due to federal budget timing, the company is positioning itself as a foundational semiconductor partner for next-generation computing, particularly through superconducting integrated circuits and photonics that could remain technologically relevant well into the 2030s. Its primary competitive advantage lies in its differentiated “Technology as a Service” (TaaS) model, which allows customers to co-develop chips within its fabrication environment—unlike traditional contract manufacturers such as TSMC that focus primarily on scale production.

Combined with its “Trusted” status with the U.S. Department of Defense, this creates a strong moat for government and defense-related programs. Customers in defense, medical, and quantum sectors view the firm as a strategic partner rather than a vendor, reinforcing long-term relationships aligned with national security and supply chain resilience priorities. Financially, operating leverage is beginning to emerge, with GAAP gross margins reaching 24% in Q3 2025, and margins expected to expand as the business shifts from R&D-heavy programs toward higher-volume wafer services.

The company is capital intensive, requiring significant investment in tools and cleanrooms, but strategic debt deployment—such as the Fab 25 purchase for roughly $93 million—has added substantial revenue capacity. Success in advanced packaging expansion, alongside potential support from the CHIPS and Science Act, could drive significant valuation rerating, though risks remain if future computing paradigms move beyond materials its facilities can manufacture.

Previously, we covered a bullish thesis on SkyWater Technology, Inc. (SKYT) by TheUndefinedMystic in January 2025, which highlighted the company’s positioning as a key U.S.-owned foundry enabling quantum computing through strategic partnerships and government-backed initiatives. SKYT's stock price has appreciated by approximately 148.6% since our coverage. Danny Green shares a similar view but emphasizes on long-term revenue scaling, operating leverage, and the differentiated Technology-as-a-Service model.

SkyWater Technology, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 14 hedge fund portfolios held SKYT at the end of the third quarter which was 10 in the previous quarter. While we acknowledge the risk and potential of SKYT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SKYT and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.