Adeia licenses IP to clients like Disney and AMD. How AI chips could boost revenue.

Adeia, a company with a market capitalization of less than $3 billion, receives licensing fees from Amazon, Google, Disney, and AMD in exchange for access to its patents. Its business began with chip-packaging technologies, and the company now also licenses technology for streaming and e-commerce. In August, Adeia raised its long-term annual revenue outlook by 20% to $600 million, around a third more than last year’s actual top line. The company sees particular promise in its semiconductor business, doubling its annual revenue guidance for the segment. Oninvest looks at how Adeia plans to reach its targets, the role litigation plays in its business, and what analysts believe could drive the stock higher.

Adeia owns more than 14,000 patents and patent applications worldwide. The company develops technologies and grants customers the right to use its intellectual property in products for the media, entertainment, consumer-electronics, and semiconductor industries. Around 85% of its patent portfolio is developed in-house by engineers and researchers.

Adeia has two main business lines. Its media technologies cover content search and recommendations, video recording and transmission, and personalization. They are used in pay TV, streaming, social media, and consumer electronics. Its semiconductor portfolio includes chip-interconnect and packaging technologies.

The history of the business dates back to 1990 and Tessera Technologies, which developed semiconductor-packaging technologies. In 2016, Tessera acquired digital-audio developer DTS for $850 million. Its products were used in Huawei and Acer smartphones and Asus tablets. The company was then renamed Xperi Corporation. In 2020, it merged with TiVo, which owned video-recording and content search and recommendation technologies.

In autumn 2022, the product business was spun off as Xperi Inc., while the intellectual-property licensing business remained with the original company, which was renamed Adeia (from the Greek for “license”). The company said the separation would allow the two businesses to develop without competing for capital and the management’s attention.

Adeia licenses hybrid-bonding technology for chips, on which it has placed a major bet. In 2023, the company signed long-term agreements with NAND-memory manufacturer Kioxia, data-storage manufacturer Western Digital, and radio-frequency chip developer Qorvo. In March of this year, it announced a multiyear licensing agreement with AMD.

Roth analyst Scott Searle, in a September 14 note seen by Oninvest, argues that hybrid bonding is becoming increasingly important to the next generation of semiconductors, from AI and data-center processors to AI devices and optical interconnects.

Hybrid bonding allows the individual dies used to build complex chips to be connected at high density. As Maxim Group analyst Matthew Galinko explains in an August 5 note, greater interconnect density improves bandwidth, energy efficiency, and thermal performance. He describes the technology as one way to improve processor and memory performance.

Searle of Roth calls Adeia’s agreement with AMD the tip of the iceberg. He notes that Broadcom and Intel are rolling out products using hybrid bonding this year, while he expects Nvidia to begin using the technology in its Feynman processor in 2028. He forecasts that proprietary chips from major cloud companies and AI devices will expand the market.

Against this backdrop, Adeia's management has increased its long-term annual revenue outlook by 20% to $600 million. For context, the company reported revenue of $443.4 million for 2025. It expects the semiconductor business to generate $200 million in annual revenue in the long term, double its previous outlook. In the first half of 2026, revenue from the segment totaled $48.3 million, or around a quarter of total revenue.

Searle considers the outlook conservative and expects Adeia to reach it by 2030-2031. At the same time, he underscores the uncertainty surrounding the timing of contracts. He expects new agreements with chipmakers primarily in 2027 and renewals of memory manufacturers’ licenses toward the end of 2027 and in 2028.

Following its separation from Xperi, Adeia’s business was heavily dependent on pay TV, the company noted, but it has gradually expanded its customer base in streaming and other segments.

In late 2024, Adeia signed multiyear agreements with Amazon and Canon for access to its media portfolio. In materials for its shareholder meeting, the company called the Amazon deal its largest to date in so-called over-the-top services, which deliver video over the internet directly to users. Disney signed a licensing agreement in late 2025. In the second quarter of this year, Adeia renewed its agreement with Google, which includes YouTube TV.

E-commerce has emerged as another business line. Adeia’s technologies for intelligent search, recommendations, personalization, virtual shopping, and social commerce are in demand in the segment. In the second quarter, the company signed an agreement with L’Oréal and a deal with patent risk management outfit RPX. Through the RPX deal, Adeia added 10 e-commerce customers in one move.

In the second quarter, Adeia’s revenue rose 12% year over year to $96 million, while the net income increased almost 4% to $17.4 million. Roth estimates that media revenue outside of pay TV grew 15-20% in the first half. It expects streaming and e-commerce to drive annual growth of at least 15% in this part of the business through the end of the decade. Roth forecasts that e-commerce will account for 10-15% of total revenue in the near term.

Adeia signs some agreements following legal disputes, and it goes to court to protect its intellectual property. For example, in November 2024, the company filed a series of lawsuits against Disney, alleging infringement of nine patents in Adeia’s intellectual property portfolio. The alleged infringements involved the streaming services’ use of technologies for improved streaming, cloud data storage, episode progress tracking, and other functions, Reuters reported. The agreement reached in late 2025 resolved the patent disputes and gave Disney access to the company’s media portfolio. A dispute with AMD ended similarly: after filing lawsuits in November 2025, the parties signed a licensing agreement in March.

However, litigation is costly, while its timing and outcomes are difficult to predict, as Maxim Group points out. In July, Adeia filed a new lawsuit against FuboTV, accusing the company of using four patented media technologies without a license. Maxim Group forecasts Adeia’s litigation expenses at $33.8 million for 2026, versus $24.7 million a year earlier. Adeia generally does not disclose the financial terms of settlements or litigation.

On September 14, Roth maintained its “buy” rating at a target price of $43 per share. The valuation is based on expansion of hybrid bonding licensing, together with growth in streaming and e-commerce. In Roth’s view, a more meaningful contribution from new agreements could prompt the market to re-rate Adeia.

The target price is equivalent to around 25 times its forecast for 2027 adjusted annual earnings per share; at Adeia’s share price of $26.71 at the time of the Roth note, the stock was trading at around 15.9 times Roth’s 2027 adjusted earnings forecast. In the longer term, Roth sees the shares rising to $50 apiece or higher.

On August 5, Maxim Group also maintained its “buy” rating while raising its target price from $35 to $39 per share. The valuation assumes an expansion of the licensing business, as well as an expected reduction in debt. The new TP is based on 14.5 times projected 2028 EBITDA.

Risks to the firms’ estimates include contraction in the traditional pay-TV market, uncertainty over the timing of new agreements, patent enforcement costs, and potential difficulties renewing licenses. Roth also notes that investments in new technologies may not generate economic returns for several years.

According to MarketWatch data, Adeia has four analyst ratings, all equivalent to “buy.” The average target price is $43 per share, implying almost 70% upside from Thursday’s close.