Thursday, Semtech Corp . (NASDAQ:SMTC (NASDAQ:SMTX)) shares received an optimistic update from Craig-Hallum, which increased the company's price target to $48 from the previous $36 while maintaining a Buy rating.
The firm's positive outlook is based on expectations of growth driven by new AI products and continued expansion in the datacenter segment.
The analyst at Craig-Hallum highlighted Semtech's potential in the AI Accelerator Card (ACC) market, projecting a significant market opportunity of approximately $100 million by FY26. Semtech and another key player, MTSI, are expected to share this market, potentially splitting it evenly.
This forecast aligns with prior expectations for Semtech's announcement, although it may have been below what some analysts anticipated.
The report further noted that Semtech has observed a clearing of channel inventories and is forecasting sequential growth across all three of its end markets. The management at Semtech underscored that the datacenter sector is likely to spearhead this growth throughout the year.
Additionally, strong revenues from China's Passive Optical Network (PON) are expected to continue, contributing to the company's performance.
Semtech's management expressed confidence in the AI ACC's market size for FY26 and the company's ability to capitalize on it alongside MTSI.
The analyst's raised price target reflects a belief in Semtech's renewed growth trajectory as it gears up to launch new AI products towards the end of the year and as the datacenter market maintains its growth momentum.
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