Semtech Corporation reported on Tuesday that its financial performance will be scrutinized as it accelerates a strategic pivot toward AI data center infrastructure, following the divestiture of its cellular module business. Wall Street anticipates the Camarillo, California-based company will post adjusted earnings per share of $0.61 for the fiscal second quarter, a 20% sequential increase from $0.51 in the prior quarter and a 49.8% year-over-year gain. Revenue is projected at $328.6 million, up 13% from $291 million in Q1 and 27.6% from a year ago.
Analysts have trimmed earnings estimates by 0.13% over the past 60 days, while revenue forecasts remain largely unchanged. The company’s Infrastructure segment, which accounted for 34% of revenue in the prior quarter, is expected to drive growth through shipments of 800-gigabit and 1.6-terabit optical modules, 1.6T transimpedance amplifiers, and CopperEdge active copper cable solutions deployed in hyperscale AI data centers.
Semtech completed the sale of its cellular module business to Compal Electronics for $62 million in mid-August, a move aimed at sharpening its focus on high-margin AI networking and LoRa connectivity technologies. Analysts at Stifel noted that the divestiture supports Semtech’s long-term gross margin target of above 60%, a key metric for investors evaluating the company’s strategic transition.
The stock, which has traded between $116.63 and $121 in recent sessions, remains well below its 52-week high of $177 reached in June. Consensus price targets suggest a 66.6% upside to $201.38, with 13 of 15 analysts rating the shares a buy. Benchmark’s Cody Acree emphasized that October data-center mix, margin quality, and backlog conversion will be critical indicators beyond any short-term variations observed in July.
Needham’s N. Quinn Bolton highlighted management’s outlook for a strong second half of fiscal 2026 and calendar 2027, driven by share gains in 1.6T platforms and the ramp-up of active copper solutions at a lead hyperscaler customer.
