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Semtech
(NASDAQ:SMTC)
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Rating:72Outperform
Price Target:
$207.00
▲(62.33% Upside)
Action:Upgraded
Date:10/02/26
SMTC scores well primarily on improving financial performance and a very strong earnings outlook, reinforced by bullish technicals (price above major moving averages and positive momentum). The main offset is valuation risk, with a very high P/E that increases sensitivity to any execution, capacity, or demand hiccups highlighted on the call.
Positive Factors
Data Center and LoRa Growth
Strong growth in data-center connectivity and LoRa demonstrates demand across two strategic platforms rather than reliance on one end market. Continued backlog momentum and guided expansion can support higher revenue, improve operating leverage, and strengthen Semtech’s position in infrastructure and IoT applications over coming quarters.
Negative Factors
Cyclical Earnings History
The sharp recovery is encouraging, but prior losses and unstable margins show that Semtech’s earnings can weaken materially when demand conditions deteriorate. This history makes current profitability less proven through a full cycle and raises the risk that operating performance may not remain consistently strong.
Read all positive and negative factors
Positive Factors
Negative Factors
Data Center and LoRa Growth
Strong growth in data-center connectivity and LoRa demonstrates demand across two strategic platforms rather than reliance on one end market. Continued backlog momentum and guided expansion can support higher revenue, improve operating leverage, and strengthen Semtech’s position in infrastructure and IoT applications over coming quarters.
Read all positive factors
Semtech (SMTC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$18.19B
Dividend YieldN/A
Average Volume (3M)3.55M
Price to Earnings (P/E)117.6
Beta (1Y)2.24
Revenue Growth17.84%
EPS Growth464.80%
CountryUS
Employees1,920
SectorTechnology
Sector Strength88
IndustrySemiconductors
Share Statistics
EPS (TTM)1.66
Shares Outstanding93,325,620
10 Day Avg. Volume3,344,297
30 Day Avg. Volume3,546,275
Financial Highlights & Ratios
PEG Ratio2.22
Price to Book (P/B)13.05
Price to Sales (P/S)6.83
P/FCF Ratio44.92
Enterprise Value/Market Cap0.72
Enterprise Value/Revenue11.09
Enterprise Value/Gross Profit21.30
Enterprise Value/Ebitda110.07
Forecast
1Y Price Target
$213.00Price Target Upside67.03% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering14
EPS Forecast (FY)3.47
Revenue Forecast (FY)$1.49B
Semtech Business Overview & Revenue Model
Company Description
Semtech Corporation is a technology firm specializing in the creation, production, and global distribution of advanced analog and mixed-signal semiconductor components, complemented by sophisticated algorithms. The company's extensive product port...
How the Company Makes Money
Semtech makes money primarily by selling semiconductor products and related connectivity solutions to electronics manufacturers and system providers. Its revenue is largely generated from (1) the sale of integrated circuits and components used for...
Semtech Earnings Call Summary
Earnings Call Date:Aug 25, 2026
(Q2-2027)
| Next Earnings Date:Dec 02, 2026
Earnings Call Sentiment Positive
The call presents a strongly positive performance and outlook: sizable revenue and EPS beats, significant margin expansion (structural improvement after the planned divestiture), record data center and LoRa growth, robust cash generation and confident forward guidance. Key risks are largely execution and capacity-related (scaling photonics fabs, tester/back-end capacity and ensuring qualification timing with hyperscalers), plus near-term consumer softness and comparability effects from the module divestiture. On balance, the upbeat results, high-growth guidance and structural margin improvement outweigh the operational and scaling risks.Positive Updates
Record Revenue and Top-Line Growth
Revenue of $342 million in Q2, up 33% year-over-year and 17% sequentially; 10th consecutive quarter of net sales growth and above the high end of the outlook range.
Negative Updates
Capacity Constraints and Near-Term Supply Risk
Management expects current secured capacity may be insufficient for FY2028 (especially H2 FY2028) and is actively securing additional front-end wafer and back-end OSAT/tester capacity; may require prepayments, CapEx or partner commitments to expand allocation.
Read all updates
Q2-2027 Updates
Positive
Negative
Record Revenue and Top-Line Growth
Revenue of $342 million in Q2, up 33% year-over-year and 17% sequentially; 10th consecutive quarter of net sales growth and above the high end of the outlook range.
Read all positive updates
Company Guidance
Semtech guided Q3 fiscal 2027 net sales of $410 million ± $5 million (≈ +20% sequential, +54% year‑over‑year at the midpoint), driven by data center revenue (projected +45% sequential, ~+160% YoY), LoRa (about +15% sequential, ~+65% YoY) and consumer/industrial growth; they expect adjusted gross margin of 58.3% ±100 bps (ex‑cellular‑module: 63.9% at midpoint), adjusted net operating expenses of $112 million ± $3 million, adjusted operating margin of 31% at the midpoint (+660 bps sequential, +1,040 bps YoY), adjusted EBITDA of $134 million ± $4 million (32.8% margin, +620 bps sequential, +930 bps YoY), adjusted diluted EPS of $1.05 ± $0.03 (+48% sequential, +119% YoY) on ~99 million weighted average shares, adjusted interest & other net of ≈$0.5 million and an adjusted normalized tax rate of 18%; management said the cellular module divestiture is expected to close in Q4 and be non‑GAAP EPS neutral, CapEx should remain generally below 5% of sales (Q2 was 2%), and they are securing incremental capacity for FY2028 with CW lasers expected to begin contributing in H1 FY2028.Semtech Financial Statement Overview
Summary
Income Statement
68
Positive
Balance Sheet
63
Positive
Cash Flow
72
Positive
| Breakdown | TTM | Jan 2026 | Jan 2025 | Jan 2024 | Jan 2023 | Jan 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.17B | 1.05B | 909.29M | 868.76M | 756.53M | 740.86M |
| Gross Profit | 611.12M | 541.60M | 455.64M | 373.99M | 478.96M | 461.14M |
| EBITDA | 118.28M | 60.20M | -44.91M | -851.06M | 131.07M | 182.53M |
| Net Income | 153.94M | -40.40M | -161.90M | -1.09B | 61.38M | 125.66M |
Balance Sheet | ||||||
| Total Assets | 1.65B | 1.41B | 1.42B | 1.37B | 2.57B | 1.13B |
| Cash, Cash Equivalents and Short-Term Investments | 204.05M | 195.18M | 164.46M | 143.13M | 235.51M | 279.60M |
| Total Debt | 524.99M | 497.30M | 557.53M | 1.38B | 1.35B | 175.65M |
| Total Liabilities | 898.17M | 860.62M | 876.84M | 1.68B | 1.81B | 393.14M |
| Stockholders Equity | 748.87M | 549.72M | 542.43M | -307.43M | 755.85M | 737.58M |
Cash Flow | ||||||
| Free Cash Flow | 181.46M | 159.73M | 43.78M | -125.02M | 98.39M | 176.94M |
| Operating Cash Flow | 202.37M | 169.51M | 57.99M | -93.92M | 126.71M | 203.12M |
| Investing Cash Flow | -86.37M | -38.76M | -11.89M | -22.70M | -1.25B | -40.32M |
| Financing Cash Flow | -80.76M | -89.42M | -21.66M | 10.55M | 1.08B | -152.10M |
Semtech Technical Analysis
Positive
127.52
Price Trends
145.96
Positive
147.24
Positive
116.89
Positive
Market Momentum
11.62
Negative
66.11
Neutral
74.59
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SMTC, the sentiment is Positive. The current price of 127.52 is below the 20-day moving average (MA) of 171.10, below the 50-day MA of 145.96, and above the 200-day MA of 116.89, indicating a bullish trend. The MACD of 11.62 indicates Negative momentum. The RSI at 66.11 is Neutral, neither overbought nor oversold. The STOCH value of 74.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SMTC.
Semtech Risk Analysis
Semtech disclosed 62 risk factors in its most recent earnings report. Semtech reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Semtech Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $41.09B | 74.12 | 27.16% | ― | 165.11% | 301.97% | |
72 Outperform | $18.19B | 117.58 | 25.26% | ― | 17.84% | 464.80% | |
72 Outperform | $24.56B | 100.50 | 17.09% | ― | 28.36% | ― | |
66 Neutral | $9.61B | -89.02 | -22.37% | ― | 50.50% | 52.01% | |
65 Neutral | $10.07B | 26.25 | 11.39% | ― | -0.18% | 403.74% | |
65 Neutral | $7.43B | -188.54 | -3.59% | ― | 21.71% | 63.22% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
SMTC
Semtech
194.88
126.71
185.87%
MTSI
MACOM Technology Solutions Holdings
321.60
189.89
144.17%
MXL
Maxlinear
105.93
89.41
541.22%
SLAB
Silicon Laboratories
222.76
87.63
64.85%
QRVO
Qorvo
114.17
21.76
23.55%
CRDO
Credo Technology Group Holding Ltd
218.64
71.22
48.31%
Semtech Corporate Events
Business Operations and StrategyFinancial Disclosures
Semtech Reports Record Q2 Fiscal 2027 Results
Positive
Aug 25, 2026
On August 25, 2026, Semtech reported unaudited results for the second quarter of fiscal 2027, ended July 26, 2026, posting record net sales of $341.9 million, up 17% sequentially and 33% year over year, with a GAAP gross margin of 53.8% and operat...
Business Operations and StrategyM&A Transactions
Semtech to Divest Cellular Module Business to Compal
Positive
Aug 13, 2026
On August 13, 2026, Semtech Corporation announced it had signed a definitive agreement to sell its cellular module business to Taiwan-based Compal Electronics, Inc. for $62 million in cash, pending customary adjustments and regulatory approvals. T...
Business Operations and StrategyPrivate Placements and Financing
Semtech Establishes New $360 Million Credit Facility
Positive
Jul 6, 2026
On July 6, 2026, Semtech Corporation entered into a new Credit Agreement establishing a $360 million revolving credit facility and an uncommitted incremental term loan option, replacing and fully repaying its prior JPMorgan-led facility from Septe...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.