Semtech Corporation SMTC has skyrocketed 240.3% in the past year, outperforming the broader market and industry peers. In the trailing 12 months, the Zacks Semiconductor - Analog and Mixed industry has declined 3.5%, while the Zacks Computer and Technology sector and the S&P 500 have returned 27.1% and 24.8%, respectively.

Semtech has also outperformed its industry peers, including Analog Devices ADI, ON Semiconductors ON and NXP Semiconductors NXPI. This outperformance reflects investor confidence in Semtech’s strong financials, expanding market presence and solid growth prospects across the data center and Internet of Things (IoT) markets.

Momentum in Data Center Fuels Semtech

The robust performance of the data center segment has remained a driving force in Semtech’s success. In the third quarter of fiscal 2025, Semtech reported a remarkable 78% year-over-year growth in data center revenues. New product lines, such as CopperEdge and Tri-Edge, are driving this demand by delivering cutting-edge solutions for high-performance connectivity.

Semtech 1 Year Price Performance Chart

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Looking ahead, Semtech's new Catlina dual-rack NVL36 offering with CopperEdge-enabled ACCs targets cloud service providers to optimize artificial intelligence (AI)-driven data center infrastructure. This product has already attracted significant interest, with the company anticipating adoption by multiple cloud providers, further solidifying its position in this high-growth market.

Semtech’s CopperEdge solution has become a key proponent in NVIDIA’s attempts to scale AI networking. As CopperEdge minimizes noise more efficiently and at lower cost and power than digital chips, it is being adopted by Nvidia’s Blackwell platform. Semtech’s CopperEdge product line has the potential to help SMTC grow among hyperscalers, providing the company with ample growth opportunities.

Growing Demand for IoT Solutions Fuels Semtech

Semtech’s IoT revenues also demonstrated resilience, growing 11% sequentially in the third quarter of fiscal 2025. Semtech is gaining from the growing adoption of its LoRa technology and LoRaWAN standards, which enable efficient, long-range, low-power wireless connectivity for a range of industrial applications.

During the last earnings call, management highlighted strong bookings and backlog for IoT solutions, boosting its momentum across end markets, such as smart cities, agriculture and logistics. For Semtech, this segment remains a crucial growth driver as IoT adoption advances globally.

Strategic Innovations Make Semtech Promising

SMTC's commitment to innovation is evident in its continued investment in advanced design solutions and next-generation technologies. These strategic initiatives position the company to capitalize on emerging trends, such as AI, cloud computing and smart infrastructure.

Furthermore, Semtech’s solid pipeline of products and strategic focus on high-demand markets like AI and IoT ensure a sustainable growth trajectory. The Zacks Consensus Estimate for fiscal 2025 and 2026 reflects this optimism, with revenues expected to grow 4.6% and 21.1%, respectively.

EPS is projected to increase 450% for fiscal 2025 and 128.1% for fiscal 2026. Semtech has surpassed the Zacks Consensus Estimate for earnings thrice in the trailing four quarters while missing the same on one occasion, the average negative surprise being 0.6%.

Semtech Corporation Price, Consensus and EPS Surprise

Technical Indicator Signals Further Uptrend for SMTC Stock

Adding to investors’ confidence, Semtech’s shares are trading above the 50-day moving average, a technical indicator often seen as a bullish signal. This movement suggests a potential continuation of the upward trend.

50-Day Moving Average Indicates Further Momentum

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Conclusion: Buy SMTC Stock for Now

Semtech's remarkable rally in the trailing 12 months is underpinned by strong fundamentals, innovative products and growth across key segments like data centers and IoT. The company's strong pipeline, strategic focus on high-growth markets and improved financial health make it a compelling investment.

With Semtech positioned to capitalize on AI-driven infrastructure needs and expanding IoT applications, the stock is poised for sustained growth in 2025 and beyond. Investors seeking exposure to a dynamic semiconductor company should consider adding SMTC to their portfolios. The stock currently carries a Zacks Rank #2 (Buy), reinforcing its investment appeal. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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