While Raspberry Pi could be one of the very few in the tech sector to benefit from President Trump’s oscillating tariffs, the computer maker demands a high price for investors looking for growth stocks that are at least partly protected from presidential whims.
One of a small number of successful initial public offerings last year, the Cambridge-based microcomputer manufacturer currently trades at nearly 42 times expected earnings. That’s considerably higher than some of the biggest names in tech.
The “magnificent seven” members Apple and Nvidia trade at ratios of just 28 times earnings and 23 respectively. However, Raspberry Pi’s high price tag is not unheard of among the company’s broader peer group.
Major players in its industry, such as Analog Devices, trade at 24 times earnings, but some of Raspberry Pi’s smaller competitors trade at considerably higher valuations. For example, Lattice Semiconductor, an American manufacturer, is priced at 41 times earnings.
Where Raspberry Pi does differ from its competitors, though, is that more than ten years ago, the company’s chief executive, Eben Upton, decided to relocate its manufacturing base from China to Pencoed, just off the M4 in South Wales, coincidentally just 15 miles from where he was born.
That decision, taken well before Trump became a force in US politics, may prove to be remarkably prudent.
• Raspberry Pi profits fall for year but beat forecasts
Many of Raspberry Pi’s competitors source their products from China, and imports from the country to the US currently face duties of 145 per cent.
For almost all of its single-board computers, Raspberry Pi sources a key component from the US, while most of its peers source them from China instead. The only exception is the company’s Raspberry Pi Pico series, where the component is designed in-house in Cambridge.
While this could provide the company with an edge against some of its competitors, that would only be the case if the tariffs and associated economic impact do not dampen American appetite for semiconductors entirely.
In its inaugural set of results, $49.9 million of its sales were made in the Americas, or roughly 19 per cent of total group sales, making the region its second largest market after the UK.
Revenue in the region rose by 10 per cent year-on-year, while sales fell overall by 2 per cent to $259.5 million.
The company also reported a 57 per cent drop in profit before tax, as it battled inventory issues. At the same time, earnings on an adjusted basis came in above analysts’ expectations at $37.2 million.
Raspberry Pi has said that its inventory issues have since normalised, and that it was involved in a number of “promising direct discussions” with original equipment manufacturers.
The company first made a name for itself in the hobbyist market, where its single-board computers were used in everything from wildlife cameras to retro video-gaming consoles.
These customers accounted for about 30 per cent of its end users in 2024. Original equipment manufacturers now make up the other 70 per cent of the company’s end users and are an important part of the company’s business.
To better support the requirements of these larger manufacturers that may be looking for more economically viable or physically smaller devices, Raspberry Pi has recently made an entry into the microcontroller market.
Unlike its ever more powerful single-board computers, microcontrollers are typically used for lower-level applications such as controlling monitors or sensors.
While Raspberry Pi’s single-board computers are undoubtedly cheap — its most recent model retails for less than £50 — the microcontrollers are an order of magnitude more affordable, costing less than £1 each.
Analysts at Peel Hunt are bullish about the company’s prospects of breaking into the market, which hasn’t seen a new entrant in decades as market leaders have consolidated through mergers and acquisitions.
In the most likely scenario, the bank estimates it could gain a 0.25 per cent market share by the end of the decade, bringing in an extra $87 million in sales.
In 2024, it sold 5.7 million microcontroller units, up from 3.1 million units in 2023. Raspberry Pi added that in 2025, it may, for the first time, sell more microcontroller units than single-board computers and compute modules combined.
While the company undoubtedly remains pricey, its possible tariff protection and promising entrance into the market for microcontrollers means that Raspberry Pi more than justifies its rather expensive price tag.
Advice: Buy
Why: Attractive business and possible tariff protection
