Semtech Stock Rips Higher After Q3 Earnings Beat

Small-cap semiconductor stock Semtech (SMTC) has spiked more than 18% in electronic trading after the company reported a strong performance for Q3, surpassing Wall Street's revenue expectations with a 17.9% year-on-year increase to $236.8 million. The company also provided optimistic guidance for Q4, projecting a 29.6% year-on-year sales increase that surpassed analysts’ estimates. 

Specifically, management guided for current-quarter earnings per share (EPS) of $0.29 to $0.35, with revenue in the range of $245 million to $255 million. By comparison, Wall Street was looking for fiscal Q4 EPS of $0.27 on $242.03 million in revenue.

This positive outlook is supported by growth across the company’s end markets, particularly in data centers driven by AI demand. Semtech's improved operating margin and free cash flow, along with a reduction in inventory days outstanding, indicate effective management and operational efficiency. 

Heading into tonight’s report, SMTC stock was already up by a staggering 143% on a year-to-date basis. The stock is up 18.8% after hours to trade above $63, which would mark a new two-year high - and it’s also a slight premium to the highest price target for Semtech among Wall Street analysts, which currently stands at $61.

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