Needham analyst Charles Shi initiated coverage of Ceva Inc (NASDAQ:CEVA) with a Buy rating and a price target of $55, calling the company a “potential play on Physical AI.” Shi noted that applications such as cars, drones and robots require semiconductor chips beyond compute and memory. He stated that Ceva is in the "non-AI camp" of semiconductors and needs an AI catalyst, which “may be on the horizon” in the form of Physical AI. Shi explained that Physical AI requires a powerful AI model capable of interacting with the real world, and while existing AI leaders should still benefit, Ceva, as a leader in IoT, "should get a new life in the world of Physical AI." He added that Ceva’s portfolio in wireless connectivity, sensing, DSPs, and NPUs positions it to win. Shi also noted that while most AI stocks trade at record multiples, Ceva's valuation remains within historical ranges, presenting an opportunity. Shares of Ceva had risen by 4.75% to $48.22 at the time of publication on Monday.