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Semtech Rises 154% YTD: Should You Buy, Sell or Hold the Stock?
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Key Takeaways
Semtech's data center revenues hit $100 million in Q2 fiscal 2027, up 91% year over year.
Semtech expects 1.6T products to exceed 50% of Q3 data center revenues as demand accelerates.
LoRa revenues rose 58% year over year to $58 million, driven by smart home, security and industrial demand.
Semtech Corporation (SMTC - Free Report) shares have surged 154.1% year to date (YTD), outperforming the Zacks Semiconductor - Analog and Mixed industry’s growth of 45.2%. The stock also outperformed its industry peers, including Microchip Technology (MCHP - Free Report) , ON Semiconductor (ON - Free Report) and NXP Semiconductors (NXPI - Free Report) . YTD, shares of Microchip Technology, ON Semiconductor and NXP Semiconductors have gained 18.6%, 43.1% and 4.8%, respectively.
The outperformance of SMTC’s shares raises the question: Does it still have room to run, or is it time for investors to consider taking profits? Let’s find out.
YTD Price Return Performance
Image Source: Zacks Investment Research
Semtech’s 1.6T Ramp to Drive Data Center Growth
Semtech is seeing strong demand for its data center products as hyperscalers increase spending on AI infrastructure. The company’s data center revenues reached a record $100 million in the second quarter of fiscal 2027, up 39% sequentially and 91% year over year. Growth was driven by continued strength in 800G products, along with the ramp of 1.6T CopperEdge and FiberEdge solutions. Management expects this momentum to continue, with data center revenues projected to increase 45% sequentially and 160% year over year in the third quarter of fiscal 2027.
The 1.6T transition could become an important growth driver for Semtech. Management expects 1.6T FiberEdge and CopperEdge products to account for more than 50% of total data center revenues in the third quarter of fiscal 2027. Semtech is also gaining market share in optical connectivity, where its FiberEdge business has grown from about 18% market share in 800G two years ago to more than 50%. Further, the company expects its 1.6T FiberEdge market share to exceed 50% by the end of fiscal 2027.
The company is also preparing for the next stage of data center growth. Semtech is expanding its photonics portfolio through gain chips, high-power CW lasers, semiconductor optical amplifiers and photodiodes. These products are aimed at higher-speed applications, including 3.2T transceivers and co-packaged optics. Management expects its content per transceiver to increase from high single-digit dollars to high double-digit dollars as data center speeds move from 800G to 3.2T.
Strong customer demand supports SMTC’s prospects as well, with the company reporting that its backlog for the remainder of fiscal 2027 was fully booked and more than 70% of its target for fiscal 2028 was already covered. Management is also working with manufacturing partners to secure additional capacity for fiscal 2028 and beyond. If it can meet customer requirements and maintain its product momentum, the 1.6T ramp could remain an important driver of Semtech’s data center growth over the next several quarters.
The Zacks Consensus Estimate for SMTC’s fiscal 2027 and 2028 revenues indicates year-over-year growth of 41.5% and 28.5%, respectively.
Image Source: Zacks Investment Research
Strong LoRa Growth Boosts SMTC's Prospects
Semtech is seeing strong growth in its LoRa business as demand increases across industrial, commercial and consumer applications. LoRa-enabled net sales reached a record $58 million in the second quarter of fiscal 2027, up 31% sequentially and 58% year over year. Growth reflects wider adoption of LoRa across different applications, including smart homes, security systems and industrial monitoring. Management expects the business to maintain its momentum, with LoRa revenues projected to grow about 15% sequentially and 65% year over year in the third quarter of fiscal 2027.
Semtech is expanding its LoRa portfolio to address more applications. Its LoRa Gen 4 platform supports higher data speeds while maintaining low power consumption and long-range connectivity. These features can support new uses in smart homes, security and industrial applications. For example, LoRa-enabled sensors can help monitor industrial equipment and support predictive maintenance. In public safety, the technology can also enable sensors to transmit audio for AI-based verification instead of sending simple alerts.
Amazon Sidewalk is another potential growth driver for Semtech’s LoRa business. Following Ring’s launch of a new range of LoRa-based sensors in the United States, Amazon Sidewalk is expanding internationally, starting with Canada and Mexico, while Europe, Australia and Japan are expected to follow. This expansion could help increase the use of LoRa-based devices in consumer applications through Amazon’s network. Meanwhile, LoRa Plus is gaining traction in smart home and security markets, broadening the company’s opportunities beyond traditional industrial and commercial use cases.
Strong momentum in LoRaWAN, LoRa Plus and Amazon Sidewalk can also support SMTC’s future growth. Management expects LoRa revenues to grow at a rate above its previous 20% benchmark, supported by demand across these applications. With record revenues, new use cases and expanding distribution through Amazon Sidewalk, LoRa could become an increasingly important contributor to Semtech’s overall growth.
SMTC’s Valuation Reflects High Growth Expectations
SMTC is currently trading at a higher price-to-sales (P/S) multiple compared with the industry. SMTC’s forward 12-month P/S ratio sits at 9.82X, higher than the industry’s forward 12-month P/S ratio of 8.43X.
SMTC Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
SMTC stock also trades at a higher P/S multiple compared with other industry peers, including Microchip Technology, ON Semiconductor and NXP Semiconductors. At present, Microchip Technology, ON Semiconductor and NXP Semiconductors have P/S multiples of 5.89X, 4.18X and 3.72X, respectively.
SMTC’s rally reflects investor excitement about AI-related data center demand, putting it above industry and peers in terms of valuation, reflecting the high growth expectations of the company in the long term.
Conclusion: Buy SMTC Stock Right Now
Semtech is seeing strong demand for AI data center products, with the ramp-up of 1.6T solutions driving revenue growth and a strong backlog supporting future demand. The company’s LoRa business is growing as adoption increases across smart homes, security and industrial applications. These factors support the outlook for continued growth. Further, the stock’s valuation reflects high growth expectations, which are set to benefit from rising AI data center spending and wider adoption of LoRa technology.
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Semtech Rises 154% YTD: Should You Buy, Sell or Hold the Stock?
Key Takeaways
Semtech Corporation (SMTC - Free Report) shares have surged 154.1% year to date (YTD), outperforming the Zacks Semiconductor - Analog and Mixed industry’s growth of 45.2%. The stock also outperformed its industry peers, including Microchip Technology (MCHP - Free Report) , ON Semiconductor (ON - Free Report) and NXP Semiconductors (NXPI - Free Report) . YTD, shares of Microchip Technology, ON Semiconductor and NXP Semiconductors have gained 18.6%, 43.1% and 4.8%, respectively.
The outperformance of SMTC’s shares raises the question: Does it still have room to run, or is it time for investors to consider taking profits? Let’s find out.
YTD Price Return Performance
Image Source: Zacks Investment Research
Semtech’s 1.6T Ramp to Drive Data Center Growth
Semtech is seeing strong demand for its data center products as hyperscalers increase spending on AI infrastructure. The company’s data center revenues reached a record $100 million in the second quarter of fiscal 2027, up 39% sequentially and 91% year over year. Growth was driven by continued strength in 800G products, along with the ramp of 1.6T CopperEdge and FiberEdge solutions. Management expects this momentum to continue, with data center revenues projected to increase 45% sequentially and 160% year over year in the third quarter of fiscal 2027.
The 1.6T transition could become an important growth driver for Semtech. Management expects 1.6T FiberEdge and CopperEdge products to account for more than 50% of total data center revenues in the third quarter of fiscal 2027. Semtech is also gaining market share in optical connectivity, where its FiberEdge business has grown from about 18% market share in 800G two years ago to more than 50%. Further, the company expects its 1.6T FiberEdge market share to exceed 50% by the end of fiscal 2027.
The company is also preparing for the next stage of data center growth. Semtech is expanding its photonics portfolio through gain chips, high-power CW lasers, semiconductor optical amplifiers and photodiodes. These products are aimed at higher-speed applications, including 3.2T transceivers and co-packaged optics. Management expects its content per transceiver to increase from high single-digit dollars to high double-digit dollars as data center speeds move from 800G to 3.2T.
Strong customer demand supports SMTC’s prospects as well, with the company reporting that its backlog for the remainder of fiscal 2027 was fully booked and more than 70% of its target for fiscal 2028 was already covered. Management is also working with manufacturing partners to secure additional capacity for fiscal 2028 and beyond. If it can meet customer requirements and maintain its product momentum, the 1.6T ramp could remain an important driver of Semtech’s data center growth over the next several quarters.
The Zacks Consensus Estimate for SMTC’s fiscal 2027 and 2028 revenues indicates year-over-year growth of 41.5% and 28.5%, respectively.
Image Source: Zacks Investment Research
Strong LoRa Growth Boosts SMTC's Prospects
Semtech is seeing strong growth in its LoRa business as demand increases across industrial, commercial and consumer applications. LoRa-enabled net sales reached a record $58 million in the second quarter of fiscal 2027, up 31% sequentially and 58% year over year. Growth reflects wider adoption of LoRa across different applications, including smart homes, security systems and industrial monitoring. Management expects the business to maintain its momentum, with LoRa revenues projected to grow about 15% sequentially and 65% year over year in the third quarter of fiscal 2027.
Semtech is expanding its LoRa portfolio to address more applications. Its LoRa Gen 4 platform supports higher data speeds while maintaining low power consumption and long-range connectivity. These features can support new uses in smart homes, security and industrial applications. For example, LoRa-enabled sensors can help monitor industrial equipment and support predictive maintenance. In public safety, the technology can also enable sensors to transmit audio for AI-based verification instead of sending simple alerts.
Amazon Sidewalk is another potential growth driver for Semtech’s LoRa business. Following Ring’s launch of a new range of LoRa-based sensors in the United States, Amazon Sidewalk is expanding internationally, starting with Canada and Mexico, while Europe, Australia and Japan are expected to follow. This expansion could help increase the use of LoRa-based devices in consumer applications through Amazon’s network. Meanwhile, LoRa Plus is gaining traction in smart home and security markets, broadening the company’s opportunities beyond traditional industrial and commercial use cases.
Strong momentum in LoRaWAN, LoRa Plus and Amazon Sidewalk can also support SMTC’s future growth. Management expects LoRa revenues to grow at a rate above its previous 20% benchmark, supported by demand across these applications. With record revenues, new use cases and expanding distribution through Amazon Sidewalk, LoRa could become an increasingly important contributor to Semtech’s overall growth.
SMTC’s Valuation Reflects High Growth Expectations
SMTC is currently trading at a higher price-to-sales (P/S) multiple compared with the industry. SMTC’s forward 12-month P/S ratio sits at 9.82X, higher than the industry’s forward 12-month P/S ratio of 8.43X.
SMTC Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
SMTC stock also trades at a higher P/S multiple compared with other industry peers, including Microchip Technology, ON Semiconductor and NXP Semiconductors. At present, Microchip Technology, ON Semiconductor and NXP Semiconductors have P/S multiples of 5.89X, 4.18X and 3.72X, respectively.
SMTC’s rally reflects investor excitement about AI-related data center demand, putting it above industry and peers in terms of valuation, reflecting the high growth expectations of the company in the long term.
Conclusion: Buy SMTC Stock Right Now
Semtech is seeing strong demand for AI data center products, with the ramp-up of 1.6T solutions driving revenue growth and a strong backlog supporting future demand. The company’s LoRa business is growing as adoption increases across smart homes, security and industrial applications. These factors support the outlook for continued growth. Further, the stock’s valuation reflects high growth expectations, which are set to benefit from rising AI data center spending and wider adoption of LoRa technology.
Currently, SMTC sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.