Investing in quality growth stocks is a proven strategy for building long-term wealth and generating outsized gains over time. Moreover, Canadian investors should consider holding these growth stocks in a TFSA (Tax-Free Savings Account), as any returns earned in this account are sheltered from Canada Revenue Agency taxes.
In this article, I have identified one U.S.-based tech stock that is growing steadily and is positioned to deliver market-beating gains over time.
Is this tech stock a good buy right now?
Valued at a market cap of US$3.46 billion, Silicon Laboratories (NASDAQ: SLAB) is a fabless semiconductor company specializing in analog-intensive mixed-signal solutions. It focuses on IoT (Internet of Things) applications, developing wireless microcontrollers and sensors for smart homes, industrial automation, and connected health devices. These products power everything from security systems and lighting controls to wearables and medical instruments.
Like other chip stocks, Silicon Laboratories is cyclical, and its sales have fallen from US$644.8 million in 2015 to US$584 million in 2024. Despite this cyclicality, SLAB stock has returned over 100% to shareholders in the past decade. However, the tech stock trades 50% below all-time highs, allowing you to buy the dip.
Silicon Labs outlined an ambitious growth strategy at its 2025 Analyst Day, projecting 20% annual revenue growth and confident expansion in the embedded wireless market. The company, which divested non-core businesses to focus exclusively on IoT connectivity, emphasized its unique market position.
CEO Matt Johnson highlighted strong design win momentum, with US$10 billion in lifetime revenue secured across thousands of customers. Silicon Labs’s Series 2 platform has shipped nearly one billion units to date, with another six billion units in the pipeline. Meanwhile, its next-generation Series 3 platform is already sampling with customers and beginning production ramps.
Silicon Labs is seeing accelerating growth in Bluetooth (80% year over year) and WiFi (40% year over year) product lines, expanding its addressable market beyond traditional sub-gigahertz and 15.4 protocol technologies. Key growth vectors include Matter-Thread smart home ecosystems, with adoption expected to accelerate in 2026-2027, and artificial intelligence at the edge, which will drive both more connected devices and more silicon content per device.
Silicon Labs highlighted traction in continuous glucose monitors (CGM) in specific markets, with shipments to more than 10 customers globally and engagement with 60 more. It also pointed to strong positions in smart metering (projecting one billion cumulative units shipped by 2030) and electronic shelf labels, where it has shipped over 300 million units.
CFO Dean Butler presented a financial model targeting 20% annual revenue growth, 56-58% gross margins, and 20% operating margins over time. Management emphasized that 2025 growth will primarily come from existing design wins ramping to production and will not be dependent on a broad market recovery.
What is the target price for SLAB stock?
Silicon Labs’s stock represents a high-margin, high-growth investment proposition in the expanding IoT connectivity space. The company is positioned for share gains even if market conditions remain challenging.
Analysts expect Silicon Labs to grow its sales at an annual rate of 23% over the next three years. Comparatively, adjusted earnings are forecast to expand to US$4.28 per share in 2027, compared to a loss of US$1.72 per share in 2024. If the tech stock is priced at 35 times forward earnings, it will trade around US$155 per share, indicating an upside potential of almost 50% over the next two years.
