Mediatek: 4Q25 was ok, 1Q26 guidance is very weak. AI chip revenue in 2026 lead to expensive valuation

4Q25: just in-line. 2025 ends with essentially no growth YoY. Weak 1Q26 guidance, weak margins, operating profit -8% below Consensus and declining -27% YoY. Very weak.

2026: decline in smartphone volumes as component (memory) prices put pressure on cost; growth in Edge, both connectivity and the beginning of AI Data Center chips ($1bn). The slow decline in margins could finally stabilize.

Weak outlook but CEO increase AI addressable market (not timeline). Is it enough?

Consensus is ok on 2026 revenues, a bit too high on margins. The stock trades at 26.5x 2026 EPS and 18x 2027. This reflects high optimism on the future AI ASIC business, despite low visibility.