Last Update 09 Dec 25
Fair value Decreased 1.92%LSCC: AI Demand And Auto Headwinds Will Shape Future Share Performance
Analysts have modestly raised their price target on Lattice Semiconductor to about $79 per share from roughly $80 previously, as they factor in stronger AI driven revenue acceleration, improving sentiment, and expectations for better than seasonal earnings growth despite some macro headwinds.
Analyst Commentary
Bullish analysts point to a broad reset higher in price targets in the mid to high $70s and low $80s range, reflecting greater confidence in Lattice Semiconductor's ability to monetize accelerating AI demand and deliver above seasonal revenue growth. Updated models incorporate sharper revenue ramps ahead, with easy year over year comparisons and growing conviction that the company can sustain premium growth versus many semiconductor peers.
These analysts also highlight that investor sentiment has turned more constructive as the market increasingly recognizes Lattice's discipline in focusing on industrial and automotive end markets, where pricing and mix are often more resilient. Expectations for in line to modestly better than expected quarterly results, even against a mixed macro environment, underpin the view that the stock's valuation can be supported by durable earnings expansion rather than just multiple re rating.
At the same time, there is some caution around potential near term headwinds, particularly tied to Chinese electric vehicle production cuts and softer tariff driven pull ins, which could weigh on auto exposed demand into the fourth quarter. While these risks are not viewed as thesis breaking, they do temper the most aggressive upside scenarios and frame the current target range as contingent on management executing through a choppy macro backdrop.
Bullish Takeaways
- Bullish analysts see AI driven demand as a key catalyst for faster revenue acceleration, which could justify Lattice Semiconductor trading at a premium multiple to the broader semiconductor group.
- Exposure to industrial and automotive markets is viewed as strategically advantageous, supporting more stable margins and improving the quality and visibility of future earnings.
- Expected in line to modestly better than seasonal results in the near term reinforces confidence in execution, reducing downside risk to earnings estimates.
- Rising AI server deployments, including next generation platforms, are seen as expanding Lattice's total addressable market and underpinning longer term earnings growth assumptions embedded in higher price targets.
Bearish Takeaways
- Bearish analysts caution that Chinese electric vehicle production cuts could pressure auto related demand, creating downside risk to near term revenue and margins.
- Any slowdown in macro conditions or reduced capital intensity across AI infrastructure could limit upside to current growth and valuation assumptions.
- The stock's rerating on improved sentiment leaves less room for error on execution, with modest earnings misses or weaker guidance potentially driving a sharper multiple compression.
- Concentration of growth expectations around AI and specific high growth end markets increases sensitivity to any delays in customer deployments or product ramps.
What's in the News
- Lattice Semiconductor introduced the MachXO5-NX TDQ FPGA family with full CNSA 2.0 compliant post quantum cryptography support, targeting secure Computing, Communications, Industrial, and Automotive applications (Key Developments).
- The company provided fourth quarter 2025 revenue guidance in the range of $138 million to $148 million, noting expectations for continued growth despite macro uncertainty (Key Developments).
- Lattice announced a new share repurchase program authorizing up to $250 million in buybacks with no expiration date, reflecting a focus on capital return to shareholders (Key Developments).
- The Board of Directors separately authorized a new buyback plan on December 3, 2025, indicating an ongoing commitment to repurchasing shares (Key Developments).
- Lattice was removed from the PHLX Semiconductor Sector Index, potentially affecting index related ownership and trading dynamics (Key Developments).
Valuation Changes
- Fair Value Estimate decreased slightly to approximately $78.77 from about $80.31 per share, reflecting a modestly more conservative intrinsic value assessment.
- Discount Rate edged down marginally to about 10.43 percent from roughly 10.48 percent, implying a slightly lower required return on equity.
- Revenue Growth was effectively unchanged at around 17.53 percent, indicating stable expectations for Lattice Semiconductor's top line expansion.
- Net Profit Margin remained virtually flat at roughly 23.35 percent, suggesting no material change in anticipated long term profitability.
- Future P/E eased modestly to about 75.2x from approximately 76.8x, pointing to a slightly lower valuation multiple on projected earnings.
Key Takeaways
- Rising demand for AI, edge computing, and connected devices is boosting Lattice's growth opportunities, revenue durability, and market position.
- Focus on advanced products and software expansion is driving margin improvement, customer loyalty, and stable long-term earnings.
- Increasing competition, reliance on a focused product niche, regulatory risks, industry cyclicality, and rising costs could pressure margins and threaten sustained revenue and earnings growth.
Catalysts
About Lattice Semiconductor- Develops and sells semiconductor, silicon-based and silicon-enabling, evaluation boards, and development hardware products in Asia, Europe, and the Americas.
- The ongoing AI and edge computing boom is driving hyperscale data center spend and increasing Lattice's attach rate as a companion chip for AI accelerators, servers, and networking equipment, leading to higher ASPs and robust design wins; this should accelerate revenue growth and support gross margin expansion.
- Strong growth prospects in industrial automation, robotics, and IoT, fueled by rising adoption of connected devices and demand for energy-efficient edge computation, position Lattice to benefit from broad end-market exposure and application diversity, enhancing long-term revenue durability.
- Product mix shift toward higher-value new products (Nexus, Avant, AI-optimized FPGAs) is raising overall gross margins, with management indicating new products will be the main revenue driver through 2026; the transition supports sustainable margin and earnings improvement.
- Channel inventory normalization, particularly in Industrial and Automotive, is expected to unlock pent-up demand and drive a rebound in these segments in 2026, providing a clear catalyst for sequential and year-on-year revenue acceleration.
- Sustained design win momentum with hyperscalers, leading OEMs, and robotics customers, alongside expanding software ecosystem investments, supports a higher base of recurring revenue and improved customer stickiness, which should underpin higher long-term earnings visibility and potentially lower earnings volatility.
Lattice Semiconductor Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Lattice Semiconductor's revenue will grow by 16.1% annually over the next 3 years.
- Analysts assume that profit margins will increase from 6.5% today to 24.4% in 3 years time.
- Analysts expect earnings to reach $187.0 million (and earnings per share of $1.02) by about September 2028, up from $31.6 million today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 59.7x on those 2028 earnings, down from 286.1x today. This future PE is greater than the current PE for the US Semiconductor industry at 33.5x.
- Analysts expect the number of shares outstanding to decline by 0.78% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 9.97%, as per the Simply Wall St company report.
Lattice Semiconductor Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Rising competition in the low
- and mid-end FPGA market, notably from large incumbents and aggressive Asian players, may put ongoing pressure on Lattice's gross margins and market share, negatively impacting long-term net margins and earnings.
- Heavy reliance on a narrow product focus-specifically small to midrange, low-power FPGAs as companion chips-exposes Lattice to revenue volatility if demand in key segments (e.g., industrial, automotive, or specific AI architectures) falters or if disruptive alternatives like custom silicon/SoC solutions gain adoption, threatening future topline growth.
- Accelerating regulatory scrutiny, export controls, and lingering geopolitical risks-particularly relating to China-could hinder access to key international markets, disrupt supply chains, or drive increased operating costs, thereby restricting revenue growth and pressuring earnings.
- The semiconductor industry's inherent cyclicality and risk of overcapacity could spur periodic price wars, inventory write-downs, and channel destocking events; such volatility in customer orders and pricing could directly affect both revenue and profitability despite recent strong design win momentum.
- Substantial increases in R&D and operating expenses necessary to sustain competitive differentiation amid rapid edge AI and data center evolution may outpace revenue growth, placing downward pressure on operating leverage, margins, and long-term earnings.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $63.077 for Lattice Semiconductor based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $72.0, and the most bearish reporting a price target of just $52.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $764.9 million, earnings will come to $187.0 million, and it would be trading on a PE ratio of 59.7x, assuming you use a discount rate of 10.0%.
- Given the current share price of $66.13, the analyst price target of $63.08 is 4.8% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
