Northland Securities raised its rating on Semtech Corp. to Outperform from Market Perform, citing accelerating demand for connectivity solutions in AI-driven data centers. The firm set a price target of $182, up from its prior level, as the company positions itself to capitalize on structural growth in high-speed optical and copper interconnects.
Semtech’s stock has gained 142% over the past 12 months and 56% in the last six months, reflecting investor optimism tied to its expanding role in data center infrastructure. Northland estimates data center revenue will account for 44% of total sales by the end of fiscal 2027, up from 30% currently, as AI workloads drive demand for advanced connectivity hardware. The firm also highlighted Semtech’s transition toward mid-60% gross margins, supported by higher-margin data center products, the LoRa platform, and the divestiture of its cellular modules business.
Fiscal 2027 second-quarter results exceeded expectations, with revenue and non-GAAP earnings per share coming in 4.2% and $0.10 above prior estimates, respectively. For the current quarter, management guided to revenue and non-GAAP EPS midpoints that are 13.6% and $0.32 above previous consensus, underscoring sustained momentum in its core markets.
Northland’s upgrade aligns with a broader analyst consensus. BMO Capital reiterated an Outperform rating, emphasizing Semtech’s shift into a full optical module player. Stifel, Benchmark, and Needham maintained Buy ratings, with Needham citing growth across data center and LoRa platforms. UBS, meanwhile, holds the highest target at $230, while Stifel and Benchmark each set targets of $188 and $230, respectively.
