When I first saw that shares of of NVE Corporation (NASDAQ:NVEC) surged 26% yesterday, I expected to learn that FreescaleSemiconductors (NASDAQ:FSL), which a few weeks ago introduced the first magnetoresistive random access memory (MRAM) chip, had admitted to using NVE's MRAM intellectual property in the production of those chips.

Alas, there was no such announcement. In fact, after scouring NVE's website and other financial news-related sources, I could find no discernible news to account for such a sizeable increase.

The best I can determine is that a Minnesota-based business magazine had a short article announcing that NVE's technology is now being used by Starkey Laboratories, the world's leading manufacturer of custom hearing aids, to improve the performance of its Destiny series of hearing-aid devices. Specifically, the article attributes NVE's technology with helping the device perform so well that Starkey is "well ahead of projections that it would sell a million units in a year's time."

Reportedly, the NVE sensors are so sensitive that the hearing aid will automatically switch modes without the wearer's intervention. For instance, if a user must make a cell phone call, there is no need to manually switch the device -- the sensor simply detects the cell phone and adjusts the device to eliminate any feedback. The magnetic sensors also make the hearing aids smaller, more comfortable, and more energy-efficient.

But investors must ask themselves whether this news, coupled with word last month that NVE's Q1 2007 revenues had risen 20% to $3.6 million (and net income more than doubled to $890,000), is worth such a large increase. While I agree that the two pieces of information bode well for NVE -- and should be rewarded with an increase in the share price -- I don't believe that either piece of news warrants a 26% spike right now.

For one thing, the news about the hearing aid isn't new. Reports of NVE technology in Starkey devices surfaced almost 18 months ago, although the hearing aids' improved sales are certainly noteworthy.

In addition, the overall market for NVE sensors remains relatively modest. In fact, the entire medical sensor market (which includes pacemakers, implantable cardiovertor-defibrillators and neurostimulators), is only expected to grow from roughly $650 million this year to $845 million by 2008, according to the Freedonia Group.

To be sure, this is nothing to sneeze at, but it's nowhere near the $50 billion that MRAM experts routinely tout as the potential market for NVE's spintronic technology, a figure that catapulted the company's stock to more than $60 a share back in early 2004.

It is highly unlikely that the stock will return to such levels anytime time soon. Still, investors should keep an eye on the company's entry into additional medical device markets. For some time, NVE has been selling sensor technology to St. Jude Medical (NYSE:STJ). This technology allows doctors' computers to exchange data swiftly and noninvasively with implanted medical devices such as pacemakers and defibrillators.

It's a promising technology, and there will undoubtedly be a growing market for such devices as the baby boom generation continues to age. For the company to prosper, though, it will need more agreements with the likes of leading medical-device manufacturers such as Medtronic (NYSE:MDT) and Boston Scientific (NYSE:BSX).

If it can do this, NVE investors will not only be hearing a good buying opportunity, they'll be feeling it in their heart.

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Although his wife would vehemently disagree, Fool contributor Jack Uldrich's hearing is actually pretty good. He is the author of two books on nanotechnology, and he owns stock in St. Jude Medical. The Fool has a strict disclosure policy.