Semtech Corporation (NASDAQ: SMTC) shares surged 16% on Tuesday after the semiconductor company reported second-quarter fiscal 2026 results that outpaced Wall Street expectations.
The earnings release, coupled with a series of analyst upgrades, underscored growing confidence in Semtech’s turnaround and positioning in high-growth markets such as fibre optics and AI data centres.
Earnings and revenue growth exceed expectations
Semtech reported a 20% year-over-year increase in revenue for the quarter, alongside a nearly fourfold rise in adjusted earnings compared to the same period last year.
The company’s strong performance reflected operational improvements and momentum in its FiberEdge business, which has emerged as a key growth driver.
The robust results encouraged several investment firms to raise their price targets.
Piper Sandler boosted its target to $65, pointing to FiberEdge’s contribution to top-line growth.
Stifel raised its target to $57, highlighting Semtech’s successful turnaround efforts and the potential for greater operating leverage into 2025.
Benchmark reiterated its “Buy” rating and maintained a $68 price target, citing the company’s solid execution and moderate revenue upside.
Analyst optimism builds around AI and data centres
Craig-Hallum joined the list of bullish analysts, lifting its price target to $62 from $55 while maintaining a “Buy” rating.
The firm pointed to Semtech’s strengthening position in the AI data centre market as a central factor driving long-term growth.
Key to this outlook are upcoming ramps in Linear Packet Optical (LPO) and Transimpedance Amplifier (TIA) products, along with Active Copper Cable (ACC) deployments across three major hyperscalers—two based in the US and one in China.
Craig-Hallum expects these developments to contribute significantly to Semtech’s growth in calendar year 2026.
Over the past 12 months, Semtech’s revenue has already climbed by 13.83%, adding to the positive trajectory.
Fiber optics and IoT add to growth story
While ACC revenues had been temporarily pressured by delays from NVIDIA, Semtech’s fibre optic business has remained robust, helping offset the slowdown.
Looking ahead, the company anticipates meaningful growth in its data centre revenues by fiscal year 2027 as product deployments accelerate.
Beyond its data centre exposure, Semtech is also benefiting from shifting dynamics in its Internet of Things (IoT) segment.
According to Craig-Hallum, the company is winning business from customers moving away from Quectel in favour of Semtech’s designs.
These design wins are expected to translate into stronger revenue momentum in calendar year 2025.
Additionally, the firm reported that Semtech’s LoRa business is now projected to deliver between $30 million and $40 million in quarterly revenue, up from a previous forecast of $30 million to $35 million.
Positive momentum supported by upgrades
With its stock up 31% over the past six months and Tuesday’s 16% surge further extending gains, Semtech has captured investor attention.
Multiple analysts have reinforced the company’s growth outlook with higher price targets, citing its execution, competitive positioning, and exposure to high-demand markets.
As Semtech continues to scale its fibre optic and AI-focused solutions, alongside growing traction in IoT and LoRa, the company appears well-placed to sustain its momentum through 2025 and beyond.
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