Northland Capital Markets upgraded Semtech Corp. to Outperform from Market Perform on Wednesday, citing accelerating data center growth and margin expansion.
The firm raised its price target on Semtech to $182 from its prior target, representing upside of about 29% from the stock’s latest close of $140.80. Semtech’s data center revenue is expected to rise to 44% of total revenue by the end of 2027, up from roughly 30% currently, Northland said. The upgrade follows the company’s July quarter results, which exceeded revenue and non-GAAP earnings per share estimates by 4.2% and $0.10, respectively.
Semtech’s stock has gained 142% over the past year and 56% in the last six months, supported by strong demand for its connectivity solutions amid AI infrastructure build-outs. The company’s gross margin has expanded into the mid-60% range, driven by higher-margin data center and LoRa revenue and the divestiture of its cellular module business.
Northland’s outlook aligns with other bullish analyst coverage. BMO Capital maintained an Outperform rating, highlighting Semtech’s transition into a full optical module player. Stifel, Benchmark and Needham also kept Buy ratings on the stock, with Needham citing growth in data center and LoRa platforms. UBS and Stifel both have price targets of $230 and $188, respectively.
For the October quarter, Semtech’s guidance midpoint for revenue and non-GAAP EPS surpassed prior estimates by 13.6% and $0.32, reinforcing expectations for sustained momentum in connectivity demand.
