Raspberry Pi could stand out as a significant player in the tech landscape, potentially benefiting from fluctuating tariffs imposed by President Trump. The company presents a high-value opportunity for investors seeking growth stocks, particularly those insulated from unpredictable presidential policy changes.

As one of the few successful initial public offerings in the last year, the Cambridge-based microcomputer manufacturer is currently trading at about 42 times its expected earnings, a figure notably higher than some of tech’s most prominent companies.

For comparison, notable members of the so-called “magnificent seven,” including Apple and Nvidia, are trading at earnings multiples of 28 and 23, respectively. Despite this premium, Raspberry Pi’s valuation isn’t completely out of line with others in its industry.

Industry giants like Analog Devices are priced at 24 times earnings, while some smaller competitors exhibit even higher valuations. For instance, Lattice Semiconductor, a US manufacturer, trades at 41 times earnings.

Raspberry Pi differentiates itself due to a strategic shift made over a decade ago by its CEO, Eben Upton, who moved production from China to Pencoed in South Wales, just 15 miles from his birthplace. This foresight may prove advantageous in light of current tariff scenarios.

Many of Raspberry Pi’s rivals still depend on Chinese manufacturing, which currently faces hefty tariffs of up to 145% for imports to the US. In contrast, Raspberry Pi primarily sources a critical component from the US for its single-board computers, while others typically rely on Chinese suppliers, with the exception of the Raspberry Pi Pico series, which features in-house designed components from its Cambridge headquarters.

This sourcing strategy could grant Raspberry Pi a competitive edge, provided that the effects of tariffs do not severely impact demand for semiconductors in the US market.

In its first set of disclosed results, the Americas accounted for $49.9 million in sales, approximately 19% of total group revenues, making it the second-largest market after the UK. Revenue from the Americas saw a year-on-year increase of 10%, despite an overall sales decline of 2% to $259.5 million.

The company reported a significant 57% drop in profit before tax, mainly driven by inventory challenges. However, adjusted earnings exceeded analyst expectations, amounting to $37.2 million.

Raspberry Pi noted that its inventory issues have normalized and is currently engaged in several promising discussions with original equipment manufacturers (OEMs).

The brand gained initial popularity in the hobbyist sector, where its single-board computers found uses in projects ranging from wildlife surveillance to retro gaming consoles. This segment accounted for about 30% of its users in 2024, while OEMs now represent the remaining 70%, playing a crucial role in Raspberry Pi’s business model.

To cater better to the needs of these larger manufacturers, Raspberry Pi has recently entered the microcontroller market. These devices, unlike Raspberry Pi’s increasingly advanced single-board computers, are designed for simpler applications, such as controlling monitors and sensors.

Although Raspberry Pi’s single-board computers are affordably priced — with the latest model available for under £50 — its microcontrollers are exceptionally inexpensive, costing less than £1 each.

Analysts from Peel Hunt are optimistic about Raspberry Pi’s prospects for penetrating the microcontroller market, which has seen limited new entrants for decades due to leading players consolidating through mergers and acquisitions.

In their projections, Peel Hunt anticipates that Raspberry Pi could capture a 0.25% market share by the end of the decade, potentially generating an additional $87 million in revenue. In 2024, the company sold 5.7 million microcontroller units, up from 3.1 million in 2023. They have also indicated that by 2025, sales of microcontroller units may surpass those of single-board computers combined for the first time.

While Raspberry Pi might appear to be a high-cost investment, the company’s potential shielding from tariffs and promising entrance into the microcontroller market support its justified valuation.

Recommendation: Buy. Reason: Strong business model and potential for tariff protection.