Global semiconductor company Semtech rebounded in premarket trading Friday after initially declining Thursday following near-term guidance and its longer-term revenue expectations. Wall Street sees Semtech as a key winner of the artificial-intelligence-infrastructure boom.
At its Data Center Analyst Day on Thursday, Semtech said it projects data-center revenue to more than double in both fiscal 2027 and 2028, reaching $475 million one year and $1 billion the following. The company added it expects total fiscal 2030 revenue to total $3.2 billion, with nearly 66% allocated toward data centers.
The catalyst? As optical modules require more of the company's chips to transfer large amounts of data faster, Semtech sells the specialized tiny chips needed to process high-speed light signals. The shift toward AI-driven optical connections has created massive fresh demand for their products.
But investors didn't appear too pleased initially with management's targets, sending shares down 10% on Thursday. Investors likely were disappointed because Semtech's long-term growth targets for fiscal years 2029 and 2030 implied a slowdown from explosive growth in the near term.
It was a different story as some analysts on Wall Street kept their bullish stance firm on Semtech. Shares of the global semiconductor rose 4.4% to $150.50 in premarket trading Friday.
StoneX analyst Cody Acree brushed off the selloff, saying near-term earnings performance has gotten stronger. The analyst said Friday that investors should focus on these solid short-term earnings rather than worrying about growth decelerations years away. The firm reiterated its Buy rating and $230 price target on Semtech stock, suggesting nearly 60% upside from Thursday's closing price of $144.21.
Acree saw another positive: Semtech's addressable market for data-center connectivity will expand from $3 billion to $15 billion over four years.
Needham analyst N. Quinn Bolton also reaffirmed his Buy rating on Semtech with a $200 price target. The firm anticipates the company will generate $9.15 a share in net profit in 2028.
The average rating on Semtech stock on Wall Street is Buy with an average price target of nearly $217.
Semtech also boosted its outlook for the fiscal third quarter of 2027, aiming to reach $417.5 million in revenue at the midpoint, up 56% from a year ago, and $1.14 in adjusted diluted earnings per share. Prior to the guidance boost, Semtech projected revenue of around $410 million and adjusted earnings of $1.05.
Shares of Semtech have risen nearly 95% this year as of the close of trading Thursday, according to Dow Jones Market Data.
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