Oppenheimer upgraded Semtech Corp to Outperform from Perform, saying the chipmaker is poised to benefit from rising demand for high-speed connections in AI data centers and growing adoption of its low-power networking technology in industrial and consumer devices.
The brokerage lifted its price target to $81 after meeting with company executives, saying management struck an upbeat tone about growth prospects for its Active Copper Cable (ACC) and Linear Pluggable Optics (LPO) products, which are used in data center interconnects.
ACC technology, which emerged in 2024, offers faster speeds and lower power consumption than existing alternatives and could gain traction as cloud service providers move to 800-gigabit and 1.6-terabit networks, Oppenheimer said.
It estimates Semtech has a 70% to 80% share of the ACC market and expects Google to be an early adopter, with others likely to follow.
The firm also pointed to accelerating demand for Semtech’s LoRa wireless technology, which is used for long-range, low-power communications in applications such as drones, robotics and automation.
It said LoRa could sustain growth of more than 20% annually from a base of about $150 million in revenue.
Semtech’s proximity sensing business, branded PerSe, is gaining traction in wearables including Meta’s Ray-Ban smart glasses, and could expand further if adopted in future Apple and Android devices, the note said.
Oppenheimer said a potential sale of Semtech’s non-core cellular module business, which generates roughly $200 million in annual revenue at lower margins, could serve as a catalyst by lifting profitability.
It said a shift in product mix toward data center and LoRa chips would offer further margin upside.
Source :
https://www.investing.com/news/stock-market-news/semtech-upgraded-at-oppenheimer-on-ai-data-center-and-iot-growth-bets-4263788
