Hook / Thesis
Mobileye is attractively priced after a pullback and a hot news cycle. The equity is trading around $11.27 as of 01/08/2026 and, using the company's reported diluted share count (about 812 million shares), implies a market value in the neighborhood of $9.1 billion (estimate). That market value sits below the company's book equity reported this year (~$12.07 billion), which gives us a price-to-book well under 1.0. For a firm with meaningful gross margins (~50% in the most recent quarter) and strong operating cash flow, that valuation invites a tactical long.
My view: Mobileye is a Strong Buy at current levels for investors willing to accept execution and integration risk from a recent acquisition. The trade is actionable with a clearly defined entry range, stop loss and layered targets tied to both fundamental improvement and technical mean reversion to prior trading levels.
What Mobileye does and why the market should care
Mobileye builds advanced driver-assist systems (ADAS) and autonomous driving software/hardware suites — from camera-based driver assist through Mobileye SuperVision and Mobileye Chauffeur for higher levels of autonomy. Its products are sold to OEMs and increasingly as cloud-enhanced services. The business matters because OEM adoption of ADAS and the move to software-defined vehicles create recurring revenue opportunities that can scale quickly once the software and validation overhead is recovered.
The market cares for three straightforward reasons:
- Revenue ramp potential: Automotive OEMs are increasingly rolling ADAS features into higher-content trims and option packages, creating a pathway from unit wins to sizable recurring software/service revenue.
- Healthy cash flow and balance sheet: Mobileye generated $213 million of operating cash flow in the most recent quarter while reporting current assets of roughly $2.40 billion and low current liabilities (~$347 million), providing financial flexibility.
- Strategic optionality: The company announced a $900 million acquisition of Mentee Robotics on 01/07/2026, which is a physical-AI play that could expand the TAM beyond automotive into robotics and other structured environments — high upside if the integration succeeds, but a near-term source of uncertainty.
Recent financials that support the thesis
Use the most recent quarterly reporting cadence to see momentum: Mobileye reported $506 million of revenue in Q2 (period ending 06/28/2025), up from $438 million in the prior quarter. Gross profit in that quarter was about $252 million, implying a gross margin near 50%. Operating loss narrowed sequentially (operating loss of $74 million in the latest quarter versus $117 million the quarter before), indicating improving operating leverage as revenue scales.
Other metrics worth highlighting:
- Research & development spend remains sizeable at about $282 million in the most recent quarter — a deliberate investment in software and autonomy intellectual property.
- Inventory has been trending down from prior peaks (e.g., inventory was $457 million in earlier quarters and fell to $325 million in the latest filing), which reduces short-term working capital drag.
- Operating cash flow is positive and significant: $213 million in the latest quarter, which is a strong backstop for execution and for financing strategic M&A or capex.
Valuation framing
A few practical valuation anchors, calculated from dataset items and stated explicitly as estimates where needed:
- Estimated market capitalization: price (~$11.27) x diluted shares (~812 million) = ~$9.1 billion (estimate based on latest diluted share count).
- Book value per share: equity attributable to parent (≈$12.07 billion) / diluted shares (812M) ≈ $14.86 book value per share. The stock trades below book.
- Implied revenue run-rate: summing the four recent quarterly revenues (Q3 2024 ≈ $486M, Q4 2024 ≈ $490M, Q1 2025 ≈ $438M, Q2 2025 ≈ $506M) gets to roughly $1.92 billion TTM revenue. That implies a rough P/S of ~4.8x on the estimated market cap — reasonable for differentiated software-plus-hardware auto suppliers but cheap relative to many pure software vendors given the current margin profile and cash flow.
Because there are no consistent pure-play public peers in the dataset to compare multiples with, this is a qualitative valuation check: sub-1.0 price/book for a company with solid margins and positive operating cash flow is a signal worth buying into, provided you accept execution risk on commercialization and on the new robotics acquisition.
Actionable trade idea (entry / stop / targets)
Trade direction: Long. Time horizon: Position (multi-month). Risk level: Medium.
Entry: Buy in a window of $10.50 - $12.00. (Scale in; prioritize sub-$11.50 fills.)
Stop loss: Initial stop at $9.00 (about -20% from current), reevaluate if market conditions change.
Targets: Target 1 (near-term): $16.00 — reflects recovery toward high-volume multi-month resistance.
Target 2 (intermediate): $22.00 — a move toward prior multi-month highs and partial mean reversion.
Position sizing: Keep individual position to a size consistent with a 20% stop (risk per trade small relative to portfolio).Rationale: the near-term target (~$16) is within reach if the market re-rates the stock to closer to book value and gives a modest multiple to the growing software/recurring portion. The $22 level would imply restoration toward the stock's prior trading range and would be supported by visible revenue acceleration, margin improvement, and that the Mentee Robotics deal begins to show revenue or strategic synergies.
Catalysts to drive the trade
- OEM content wins and subsequent ramp disclosure - each sizeable win materially raises the revenue trajectory.
- Quarterly results showing continued revenue expansion (Q1 → Q2 sequential increase observed) and margin improvement with R&D starting to leverage.
- Successful integration and monetization outline from the 01/07/2026 Mentee Robotics acquisition that expands addressable markets beyond automotive.
- Upgrades from sell-side analysts as revenue cadence and operating leverage become clearer.
Risks and counterarguments
Every trade here contains real risks. Below are the principal concerns I’m watching and one explicit counterargument to the buy thesis.
- Acquisition execution risk: the $900M purchase of Mentee Robotics (announced 01/07/2026) can be value-destructive if Mobileye overpays or fails to integrate the technology and teams. Financing or goodwill write-downs are possible.
- OEM concentration and timing: Mobileye's revenue depends on large OEM programs. Program timing slips or content cancellations can cause volatile revenue misses and create step-downs in expected growth.
- Autonomy technical and regulatory risk: higher-level autonomy commercialization is complex and regulatory acceptance is gradual. That can delay material revenue associated with chauffeur-level products.
- Margin pressure from heavy R&D: R&D is high (~$282M in the most recent quarter). If revenue growth disappoints, margins could remain negative longer than the market expects, compressing valuation.
- Market may correctly price strategic risk: the sub-book valuation could be the market's way of discounting the company for uncertainty around durable margins, autonomous commercialization risk, or potential Intel-related accounting/asset complexities.
Counterargument: The current price may already reflect the risk that Mobileye never converts its technological lead into sustained profitable growth. A low price-to-book ratio and compressed multiple can be warranted if future sales growth is slower than consensus or if capital allocation (acquisitions, share issuance) proves poor. In that scenario the stock is cheap for a reason and patience or strict stops are vital.
What would change my mind
I will be less constructive if any of the following occurs:
- Quarterly revenue turns negative sequentially or the company reports new cancellable OEM program losses.
- Operating cash flow turns negative on a quarterly basis and the company begins drawing material amounts of debt or dilutive equity to fund operations.
- Management discloses major integration problems, material goodwill impairment, or that the Mentee Robotics acquisition requires excessive follow-on cash to stabilize.
Conversely, the thesis would be reinforced if Mobileye prints consecutive quarters of revenue growth above the recent run-rate, shows gross margins north of ~48-50% consistently, and demonstrates operating leverage (operating losses shrinking toward profit) while maintaining positive operating cash flow.
Conclusion
Mobileye presents a compelling asymmetric opportunity right now: the company is generating strong operating cash flow, posting respectable gross margins (~50%) and sequential revenue growth, yet the stock trades under estimated book value. Those are the ingredients for an attractive position if you accept the integration and execution risks tied to a sizeable robotics acquisition.
Action plan: buy in the $10.50–$12.00 window, size to risk tolerance, place a stop at $9.00, and take profits in tranches (first target around $16, second around $22) as fundamental beats and clearer integration outcomes arrive. Keep position weight moderate while the market digests the Mentee Robotics deal.
Note: Where I cite market capitalization, per-share estimates and run-rate figures I relied on the most recent reported diluted share counts and quarter-level revenues available in filings. Some forward outcomes (acquisition financing, timing of OEM ramps) remain uncertain and should be monitored closely.
Key reading / news items
- Mobileye announced the acquisition of Mentee Robotics (reported 01/07/2026), which the market is parsing for strategic fit and near-term cost implications.
Bottom line: If you are a patient, risk-aware investor who can stomach near-term headline volatility, Mobileye at these levels is a Strong Buy for a position-sized stake with disciplined risk controls.