Could Semtech (SMTC)’s AI Data Center Push Mark a Shift in Its Innovation Trajectory?

• In late September 2025, POET Technologies and Semtech Corporation announced the immediate availability of high-performance 1.6T Receiver Optical Engines for sampling, targeting AI clusters and cloud data center networks with advanced integration and energy efficiency.
• This collaboration uniquely leverages POET's Optical Interposer platform and Semtech's FiberEdge technology, enabling compact, high-sensitivity optical solutions to address rapidly growing data center bandwidth and efficiency demands.
• We'll examine how the launch of Semtech’s 1.6T optical engines for AI infrastructure could reshape the company’s long-term investment narrative.

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Semtech Investment Narrative Recap

To be a shareholder in Semtech today, you need conviction in the company's ability to lead in high-speed optical and connectivity solutions for AI and IoT infrastructure, capturing growth in data center demand while managing the risks of margin pressure and integration issues. The recent launch of 1.6T Receiver Optical Engines could sharpen Semtech’s short-term catalyst in data center expansion, but persistent gross margin volatility in lower-margin segments remains the key risk to watch. Among recent announcements, the debut of next-generation LoRa Gen 4 transceivers stands out as especially relevant, reinforcing Semtech’s strategy to diversify revenue streams and reduce exposure to cyclical end-markets. This product family addresses both application-specific needs and cost optimization, which may help offset margin fluctuations that accompany high-volume, lower-margin business. Yet, as optimism grows around new data center wins, investors should pay close attention to the risk that gross margin pressures could...

Read the full narrative on Semtech (it's free!)

Semtech's narrative projects $1.3 billion in revenue and $253.1 million in earnings by 2028. This requires 8.5% yearly revenue growth and a $229.3 million earnings increase from $23.8 million today.

Uncover how Semtech's forecasts yield a $67.57 fair value, a 7% downside to its current price.

Exploring Other Perspectives

Five fair value estimates from the Simply Wall St Community range from US$25.69 to US$67.57, revealing opinions from deep value skeptics to bullish optimists. While many anticipate strong earnings growth, the threat of gross margin erosion continues to influence expectations and performance across the board.

Explore 5 other fair value estimates on Semtech - why the stock might be worth as much as $67.57!

Build Your Own Semtech Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Semtech research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.
• Our free Semtech research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Semtech's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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