Atomera Incorporated (NASDAQ: ATOM) is a company focused on developing and licensing advanced materials technology for the semiconductor industry. Instead of manufacturing physical computer chips, Atomera creates a special ingredient called Mears Silicon Technology (MST) that chipmakers can add to their existing production lines to make their chips work better.

The Business Model (How They Make Money)

Atomera's core business revolves around its patented Mears Silicon Technology (MST). This technology is a specially engineered thin film of silicon that, when incorporated into transistors, helps them perform faster, use less power, and be more consistent. Think of it like a secret sauce that improves the performance of existing chip designs without requiring chip manufacturers to completely overhaul their factories.

The company's primary way of making money is through licensing its intellectual property (IP) and providing engineering services. This means they grant semiconductor manufacturers, such as large foundries and integrated device makers, the right to use their MST technology in their own chip production. While the ultimate goal is to earn ongoing royalties from every chip sold that uses MST, Atomera is currently in the early stages of commercialization.

In the second quarter of 2026, Atomera reported revenue of $158,000, primarily from delivering chips to customers, including a major integrated device manufacturer. For the full fiscal year 2025, the company generated $65,000 in revenue, mainly from MSTcad licensing and related consulting services. This indicates that their revenue streams are currently small and largely tied to early-stage customer engagements and development work, rather than widespread commercial adoption and royalties.

The Metrics That Matter Most

For a company like Atomera, which is heavily focused on developing and commercializing a new technology, certain financial metrics are more telling than others.

1. Revenue: This metric tells us the total amount of money the company brings in from its business activities. For Atomera, revenue is critical because it shows how much traction their MST technology is gaining with customers. Since they are an early-stage company, any increase in revenue, especially from licensing and services, indicates progress in getting their technology adopted by chip manufacturers.
2. Operating Expenses: These are the costs associated with running the company's day-to-day business, excluding the direct costs of making a product. For Atomera, a significant portion of these expenses goes towards research and development (R&D) and marketing their MST technology. Tracking operating expenses helps us understand how much the company is investing in developing new features for MST and convincing chipmakers to use it. Given their business model, high operating expenses are expected as they invest in future growth, but it's important to monitor them in relation to their progress. In Q2 2026, operating expenses were $6.89 million, and management anticipates non-GAAP operating expenses for the full year 2026 to be near the upper end of $18.25 million to $18.75 million.
3. Net Income (Loss): This is the company's profit or loss after all expenses, including taxes, have been paid. For Atomera, net income is currently a loss, which is common for companies investing heavily in R&D before widespread commercialization. It shows how much money the company is losing as it builds its business. In Q2 2026, Atomera reported a net loss of $6.3 million, or $0.17 per share. For the full fiscal year 2025, the net loss was $20.17 million.
4. Cash: This metric represents the actual money the company has on hand. For a company like Atomera that is not yet consistently profitable, having enough cash is vital to fund its operations, R&D, and commercialization efforts. It provides a runway for the company to continue developing and marketing its technology until it achieves significant revenue and profitability. As of June 30, 2026, Atomera had $38.4 million in cash, cash equivalents, and short-term investments.
5. Operating Cash Flow: This metric shows the cash generated or used by the company's normal business operations. For Atomera, it indicates whether their core activities are bringing in more cash than they are spending, or if they are burning through cash. A negative operating cash flow means the company is using more cash than it generates from its operations, which is typical for early-stage technology companies. In Q2 2026, Atomera's operating cash burn was $3.9 million.

How to Value This Company

For Atomera, the most relevant valuation metric is the P/Sales (Price-to-Sales) ratio.

Here's why:

Since Atomera is an early-stage company with limited revenue and consistent net losses, traditional valuation metrics like the Price-to-Earnings (P/E) ratio wouldn't be meaningful because there are no earnings to compare to.

The P/Sales ratio helps you figure out if a company's stock price is reasonable compared to the amount of revenue it generates. You calculate it by taking the company's total market value (its stock price multiplied by the number of shares outstanding) and dividing it by its total sales or revenue over the last year.

For Atomera, the P/Sales ratio is useful because it focuses on their ability to generate sales, which is the first step towards profitability for a technology licensing company. Even if they aren't making a profit yet, growing revenue indicates that their technology is gaining acceptance and has the potential for future earnings. A lower P/Sales ratio might suggest the stock is "cheaper" relative to its sales, while a higher ratio could mean investors expect significant future sales growth. However, it's crucial to compare Atomera's P/Sales ratio to similar early-stage technology licensing companies, as a high ratio can also reflect investor optimism about a disruptive technology.