Piper Sandler raises Semtech stock price target to $65 on data center growth

Piper Sandler has raised its price target on Semtech Corp. (NASDAQ:SMTC) to $65.00 from $55.00, maintaining an Overweight rating, following a "beat and raise quarter" that saw a 20% year-over-year revenue increase and nearly quadrupled adjusted earnings in Q2 FY2026. The upgrade is driven by strength in its FiberEdge business and anticipated growth from Active Copper Cables and Linear Packet Optical within the data center segment, positioning the semiconductor company for fundamental upside through 2026. This positive outlook is further supported by Stifel's recent price target increase to $57, highlighting Semtech's improved business profile and potential for increased operating leverage.

Analysis

Semtech Corp. is demonstrating significant operational momentum, validated by multiple positive analyst actions and strong financial results. Both Piper Sandler and Stifel have recently raised their price targets to $65 and $57 respectively, citing a successful "beat and raise" quarter. The company's Q2 FY2026 performance was particularly robust, with a 20% year-over-year revenue increase and a near quadrupling of adjusted earnings, surpassing market expectations. This strength is primarily attributed to its FiberEdge business. Looking ahead, growth is anticipated from the data center segment, with the return of Active Copper Cables (ACC) and continued tailwinds from Linear Packet Optical (LPO) expected to drive high single to low double-digit sequential growth. Furthermore, the company's LoRa business is effectively mitigating a decline from a key customer by successfully acquiring new ones, indicating resilience. This combination of current performance, strong forward-looking catalysts, and analyst confidence in management's execution underpins the view that Semtech is positioned for fundamental upside extending into calendar year 2026.

Key Decisions for Investors

• Investors should view the dual price target upgrades from Piper Sandler and Stifel as strong validation of the company's turnaround and growth trajectory, particularly within the high-demand data center market.
• Monitor the company's ability to deliver on the projected sequential growth from its Active Copper Cables and Linear Packet Optical products, as this is a key catalyst for the bullish thesis in late 2024 and 2025.
• While the LoRa business shows resilience, investors should track whether new customer acquisition can consistently outpace the decline from its legacy customer to ensure diversified growth.
• Given the stock's 31% appreciation over the past six months, consider the current valuation in the context of the strong fundamental outlook, as the positive news may already be partially priced in.