Semtech surges 4.9% on record FY26 revenue, data center expansion
Full-year sales reach $1.05B as CEO hails 'landmark year' amid strong demand for AI infrastructure
Semtech Corporation shares climbed 4.9% to $89 in extended trading Monday after the chipmaker delivered record fiscal year 2026 revenue and provided an optimistic outlook for the artificial intelligence infrastructure market that has become central to its growth strategy.
The Camarillo, California-based company reported fourth quarter revenue of $274.4 million, beating analyst expectations of $266.4 million by 3%, while earnings per share of 44 cents narrowly missed the 44.5 cent consensus. The revenue strength proved more compelling to investors than the slight earnings miss, sending the stock higher after the bell.
Full-year fiscal 2026 revenue reached $1.05 billion, up 15% year-over-year and marking a company record, according to the official earnings announcement. Non-GAAP earnings per share for the year surged 94% to $1.71 from $0.88 in fiscal 2025, reflecting significant operational leverage amid Semtech's strategic pivot toward high-speed data center connectivity.
Chief Executive Officer Mahesh Choudhary characterized fiscal 2026 as a "landmark year" for the company, emphasizing its strengthened position in the rapidly expanding market for optical interconnects that power hyperscale data centers and AI clusters. Semtech's signal integrity segment, which includes high-speed optical and copper interconnect solutions for hyperscale data centers, has emerged as its primary growth driver as 800G and 1.6T networking become industry standards.
The company provided first quarter fiscal 2027 guidance of revenue between $278 million and $288 million, with earnings per share in a range of 42 cents to 48 cents. The midpoint of the revenue guidance aligns with analyst expectations, while EPS guidance suggests continued margin expansion.
Semtech's bullish outlook comes amid a series of strategic moves positioning it as a key supplier for next-generation AI infrastructure. In March, the company acquired HieFo Corporation, bringing Indium Phosphide optoelectronic devices including lasers and gain chips into its portfolio. The acquisition enables Semtech to co-develop optimized chipsets for 1.6T and next-generation 3.2T optical modules while bolstering U.S. technology supply chains for AI infrastructure.
The company also launched a new family of 224Gbps per lane Transimpedance Amplifiers and Mach-Zehnder Modulator drivers, compliant with emerging industry standards for linear optical interconnects. These products facilitate development of 800G, 1.6T, and 3.2T transceivers for advanced data center and cloud infrastructures.
Semtech currently holds approximately 50% market share for single-mode 800G optical transceivers, a dominant position it aims to extend into higher-speed generations. The company is prioritizing linear interconnect architectures—including Linear Pluggable Optics, Near-Packaged Optics, and Co-Packaged Optics—which remove power-intensive Digital Signal Processors from optical modules to enhance power efficiency in AI and machine learning clusters.
Market projections support Semtech's strategic focus. The market for linear optical transceivers and advanced packaging optics for AI cluster networks is expected to more than double from $5 billion in 2024 to over $10 billion in 2026. Dell'Oro Group forecasts that 2026 will see the first significant volume deployments of 1.6 Tbps switches, with an even faster ramp-up than the 800 Gbps generation.
Analysts remain broadly bullish on Semtech's prospects. The stock currently has 14 Buy or Strong Buy ratings versus a single Hold, with an average target price of $92.62, according to market data. Shares have gained 270% over the past year, dramatically outperforming broader semiconductor indices as investors embraced Semtech's transformation into a data center and AI infrastructure supplier.
The company is showcasing its capabilities this week at the Optical Fiber Communications Conference and Exhibition in Los Angeles, where it is conducting live demonstrations of its 1.6T and 3.2T optical and copper interconnect solutions. Semtech is also making accelerated investments in 400G per channel technology to enable future 3.2T modules, positioning itself for the next wave of data center networking upgrades.
Trading at 151 times trailing earnings and 39 times forward estimates, Semtech's premium valuation reflects investor confidence in its high-growth data center franchise rather than its legacy businesses. The stock's dramatic recovery from a 52-week low of $24.05 underscores how central AI infrastructure has become to the company's investment thesis after a multi-year turnaround effort.