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LSCC Q3 Earnings Beat Estimates on AI Demand, Record Revenues
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Key Takeaways
Lattice's Q3 2026 revenues jumped 118.3% to $291 million, while adjusted earnings surged 157.1% to 72 cents.
AI data center demand and AMI contributions drove record revenues, with Compute & Communications up 132%.
LSCC projects Q4 revenues of $325-$345M and expects at least 60% growth in 2027, fueled by AI and AMI.
Lattice Semiconductor Corporation (LSCC - Free Report) reported strong third-quarter 2026 results, with adjusted earnings and revenues surpassing the Zacks Consensus Estimate. Robust demand for low-power field-programmable gate arrays (FPGAs) in artificial intelligence (AI) data centers, along with improved industrial demand and contributions from the AMI acquisition, drove record quarterly revenues.
Non-GAAP earnings were 72 cents per share, which increased 157.1% year over year and beat the Zacks Consensus Estimate of 56 cents by 28.57%. Revenues surged 118.3% year over year to $291.04 million, exceeding the consensus estimate of $256.43 million by 13.5%. Record Compute & Communications revenues and accelerating FPGA adoption supported the performance.
LSCC Delivers Broad-Based Revenue Growth
Lattice generated record revenues, up 44.7% sequentially. FPGA revenues reached approximately $252 million, up 90% year over year and 25% sequentially. Growth reflected expanding AI infrastructure investments, higher FPGA attach rates and increasing semiconductor content per server.
Compute & Communications revenues reached $171.9 million, which increased 132% year over year and 36% sequentially. The segment represented 59% of total revenues. Management highlighted growing demand for agentic AI inference, disaggregated server architectures and enhanced platform security as important growth drivers.
Industrial & Embedded revenues reached $80 million, which increased 35% year over year and 7% sequentially. The segment accounted for 28% of revenues. Healthy channel inventories, improving end-market demand and new design wins supported growth across factory automation, robotics, aerospace and defense, and medical equipment.
Lattice Semiconductor Corporation Price, Consensus and EPS Surprise
Non-GAAP gross margin reached 70.9%, expanding 140 basis points year over year but contracting 80 basis points sequentially. The company benefited from stronger-than-expected margins across its FPGA and AMI businesses despite supply-chain challenges.
Non-GAAP operating expenses increased 60.8% year over year to $86.66 million, primarily reflecting the AMI acquisition and continued product development investments. Nevertheless, non-GAAP operating income surged 208.7% to $119.58 million. Non-GAAP operating margin expanded 280 basis points sequentially to 41.1%, while adjusted EBITDA margin improved 940 basis points year over year to 45%.
LSCC Generates Strong Cash Flow, Reduces Debt
Lattice generated $95 million in operating cash flow during the quarter compared with $88.3 million in the preceding quarter. Free cash flow reached $77.6 million, representing a margin of 26.7%. Higher capital expenditures reflected investments in testing capacity and research infrastructure.
As of Oct. 3, 2026, cash and cash equivalents totaled $128.28 million compared with $133.89 million at the beginning of 2026. Long-term debt was $869.08 million following a $50 million repayment during the quarter. Management expects net leverage to fall below twice EBITDA by year-end.
Lattice Strengthens AI Infrastructure With AMI
The AMI acquisition, completed July 27, contributed $39.1 million in revenues during the partial quarter, representing 13% of consolidated revenues. The business exceeded management's initial expectations and benefited from a favorable mix of higher-margin offerings.
Lattice expanded its combined FPGA and firmware portfolio through four solutions addressing security retrofit, rack boot, plug-and-play deployment, and power and cooling management. Security retrofit attracted particularly strong customer interest, with initial production beginning in the fourth quarter and broader revenue contributions anticipated in 2028.
The company also introduced Lattice Prompt, an AI-assisted FPGA development tool, and the Mach-N2 secure control FPGA family. New product revenues grew more than 70% year over year and are tracking toward representing 25% of FPGA revenues in 2026.
LSCC Issues Robust Q4 Outlook
For the fourth quarter of 2026, management expects revenues between $325 million and $345 million, implying approximately 130% year-over-year growth at the midpoint. Non-GAAP gross margin is projected at 72%, plus or minus 1 percentage point.
Non-GAAP operating expenses are expected between $95 million and $101 million, while adjusted earnings are projected at 82-86 cents per share. Management anticipates continued strength in AI data centers, accelerating Industrial & Embedded demand and a full-quarter AMI contribution.
Lattice Sees Sustained Growth Through 2027
Management expects full-year 2026 revenues of approximately $1 billion, representing roughly 90% growth over 2025. FPGA revenues are projected to exceed $900 million, with non-GAAP earnings reaching approximately $2.50 per share.
Looking ahead, Lattice anticipates revenue growth of at least 60% in 2027, supported by expanding AI infrastructure demand, industrial recovery and AMI contributions. Backlog extending into 2028, multiyear customer agreements and increasing FPGA content per server underpin management's confidence. The company also expects revenues to grow at a compound annual rate exceeding 30% over the next five years.
Motorola Solutions, Inc. (MSI - Free Report) is set to release third-quarter 2026 earnings Nov. 4. The Zacks Consensus Estimate for earnings is pegged at $4.41 per share, implying growth of 8.62% from the year-ago reported figure.
Motorola has a long-term earnings growth expectation of 10.55%. The company delivered an average earnings surprise of 7.17% in the last four reported quarters.
HubSpot, Inc. (HUBS - Free Report) is scheduled to release third-quarter 2026 earnings on Nov. 4. The Zacks Consensus Estimate for earnings is pegged at $3.28 per share, suggesting growth of 23.31% from the year-ago reported figure.
HubSpot has a long-term earnings growth expectation of 21.25%. The company delivered an average earnings surprise of 6.13% in the last four reported quarters.
CDW Corporation (CDW - Free Report) is set to release third-quarter 2026 earnings on Nov. 4. The Zacks Consensus Estimate for earnings is pegged at $2.92 per share, implying growth of 7.75% from the year-ago reported figure.
CDW has a long-term earnings growth expectation of 7.39%. The company delivered an average earnings surprise of 3.18% in the last four reported quarters.
View the Zacks #1 Rank List
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LSCC Q3 Earnings Beat Estimates on AI Demand, Record Revenues
Key Takeaways
Lattice Semiconductor Corporation (LSCC - Free Report) reported strong third-quarter 2026 results, with adjusted earnings and revenues surpassing the Zacks Consensus Estimate. Robust demand for low-power field-programmable gate arrays (FPGAs) in artificial intelligence (AI) data centers, along with improved industrial demand and contributions from the AMI acquisition, drove record quarterly revenues.
Non-GAAP earnings were 72 cents per share, which increased 157.1% year over year and beat the Zacks Consensus Estimate of 56 cents by 28.57%. Revenues surged 118.3% year over year to $291.04 million, exceeding the consensus estimate of $256.43 million by 13.5%. Record Compute & Communications revenues and accelerating FPGA adoption supported the performance.
LSCC Delivers Broad-Based Revenue Growth
Lattice generated record revenues, up 44.7% sequentially. FPGA revenues reached approximately $252 million, up 90% year over year and 25% sequentially. Growth reflected expanding AI infrastructure investments, higher FPGA attach rates and increasing semiconductor content per server.
Compute & Communications revenues reached $171.9 million, which increased 132% year over year and 36% sequentially. The segment represented 59% of total revenues. Management highlighted growing demand for agentic AI inference, disaggregated server architectures and enhanced platform security as important growth drivers.
Industrial & Embedded revenues reached $80 million, which increased 35% year over year and 7% sequentially. The segment accounted for 28% of revenues. Healthy channel inventories, improving end-market demand and new design wins supported growth across factory automation, robotics, aerospace and defense, and medical equipment.
Lattice Semiconductor Corporation Price, Consensus and EPS Surprise
Lattice Semiconductor Corporation price-consensus-eps-surprise-chart | Lattice Semiconductor Corporation Quote
Lattice Expands Profitability Amid Operating Leverage
Non-GAAP gross margin reached 70.9%, expanding 140 basis points year over year but contracting 80 basis points sequentially. The company benefited from stronger-than-expected margins across its FPGA and AMI businesses despite supply-chain challenges.
Non-GAAP operating expenses increased 60.8% year over year to $86.66 million, primarily reflecting the AMI acquisition and continued product development investments. Nevertheless, non-GAAP operating income surged 208.7% to $119.58 million. Non-GAAP operating margin expanded 280 basis points sequentially to 41.1%, while adjusted EBITDA margin improved 940 basis points year over year to 45%.
LSCC Generates Strong Cash Flow, Reduces Debt
Lattice generated $95 million in operating cash flow during the quarter compared with $88.3 million in the preceding quarter. Free cash flow reached $77.6 million, representing a margin of 26.7%. Higher capital expenditures reflected investments in testing capacity and research infrastructure.
As of Oct. 3, 2026, cash and cash equivalents totaled $128.28 million compared with $133.89 million at the beginning of 2026. Long-term debt was $869.08 million following a $50 million repayment during the quarter. Management expects net leverage to fall below twice EBITDA by year-end.
Lattice Strengthens AI Infrastructure With AMI
The AMI acquisition, completed July 27, contributed $39.1 million in revenues during the partial quarter, representing 13% of consolidated revenues. The business exceeded management's initial expectations and benefited from a favorable mix of higher-margin offerings.
Lattice expanded its combined FPGA and firmware portfolio through four solutions addressing security retrofit, rack boot, plug-and-play deployment, and power and cooling management. Security retrofit attracted particularly strong customer interest, with initial production beginning in the fourth quarter and broader revenue contributions anticipated in 2028.
The company also introduced Lattice Prompt, an AI-assisted FPGA development tool, and the Mach-N2 secure control FPGA family. New product revenues grew more than 70% year over year and are tracking toward representing 25% of FPGA revenues in 2026.
LSCC Issues Robust Q4 Outlook
For the fourth quarter of 2026, management expects revenues between $325 million and $345 million, implying approximately 130% year-over-year growth at the midpoint. Non-GAAP gross margin is projected at 72%, plus or minus 1 percentage point.
Non-GAAP operating expenses are expected between $95 million and $101 million, while adjusted earnings are projected at 82-86 cents per share. Management anticipates continued strength in AI data centers, accelerating Industrial & Embedded demand and a full-quarter AMI contribution.
Lattice Sees Sustained Growth Through 2027
Management expects full-year 2026 revenues of approximately $1 billion, representing roughly 90% growth over 2025. FPGA revenues are projected to exceed $900 million, with non-GAAP earnings reaching approximately $2.50 per share.
Looking ahead, Lattice anticipates revenue growth of at least 60% in 2027, supported by expanding AI infrastructure demand, industrial recovery and AMI contributions. Backlog extending into 2028, multiyear customer agreements and increasing FPGA content per server underpin management's confidence. The company also expects revenues to grow at a compound annual rate exceeding 30% over the next five years.
Zacks Rank
Lattice currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Upcoming Releases
Motorola Solutions, Inc. (MSI - Free Report) is set to release third-quarter 2026 earnings Nov. 4. The Zacks Consensus Estimate for earnings is pegged at $4.41 per share, implying growth of 8.62% from the year-ago reported figure.
Motorola has a long-term earnings growth expectation of 10.55%. The company delivered an average earnings surprise of 7.17% in the last four reported quarters.
HubSpot, Inc. (HUBS - Free Report) is scheduled to release third-quarter 2026 earnings on Nov. 4. The Zacks Consensus Estimate for earnings is pegged at $3.28 per share, suggesting growth of 23.31% from the year-ago reported figure.
HubSpot has a long-term earnings growth expectation of 21.25%. The company delivered an average earnings surprise of 6.13% in the last four reported quarters.
CDW Corporation (CDW - Free Report) is set to release third-quarter 2026 earnings on Nov. 4. The Zacks Consensus Estimate for earnings is pegged at $2.92 per share, implying growth of 7.75% from the year-ago reported figure.
CDW has a long-term earnings growth expectation of 7.39%. The company delivered an average earnings surprise of 3.18% in the last four reported quarters.