Jefferies, the investment bank, has identified an obscure Taiwanese company called Insyde Software as a potential undervalued player in the artificial intelligence (AI) sector. Insyde Software, listed on the Taipei Exchange, is well-positioned to take advantage of the growing demand for AI-enabled personal computers and servers. The company has garnered over 50% market share in the personal computer firmware industry. Insyde's success is attributed to its early adoption of Unified Extensible Firmware Interface (UEFI) technology and its close partnerships with top chip designers like Nvidia, Arm, Qualcomm, Intel, and ASPEED, as well as original equipment manufacturers such as Dell and HP. Jefferies initiated coverage of Insyde with a research note titled "Firmware Leader and Yet-to-be Discovered AI Play, " giving it a "Buy" rating. The note also included a price target suggesting a potential 42% upside from current levels. However, since the rating, the stock has already climbed by more than 30%, translating to a remaining upside potential of 17%.

In fact, the stock has risen by 101% in 2024 alone and has seen a staggering growth of over 1, 500% in the past five years. Jefferies believes that amid the rising global demand for AI personal computers and servers, Insyde is well-positioned to benefit with an estimated 20% compounded annual sales growth until 2030. Despite its long history in the technology sector and various partnerships, Insyde's limited sell-side coverage suggests that there is still untapped potential for the stock. Jefferies predicts that the overall personal computer BIOS sector will experience a compound annual growth rate of 14% from 2023 to 2030. Another attractive aspect of Insyde's business model is its royalty-based approach. The company charges a fee for each device that utilizes its firmware, thus benefiting from economies of scale as client shipments increase. This model has enabled Insyde to maintain gross margins above 70% and steadily improve net margins over the past decade.