Why Semtech Stock Was Flying This Week

IT hardware maker Semtech (NASDAQ: SMTC) has been cruising higher over the past few days, thanks in no small part to an investor-pleasing quarterly earnings report it published on Tuesday. As of mid-evening Thursday, its stock price was up by nearly 15%, according to data compiled by S&P Global Market Intelligence.

A solid second frame

Semtech's second quarter of fiscal 2027 featured record net sales of just under $342 million, up a robust 33% year over year. Net income not under generally accepted accounting principles (non-GAAP, or adjusted) surged higher, rising 89% to $69.5 million, or $0.71 per share.

Both headline figures were comfortably above the average analyst estimates of nearly $329 million for net sales and adjusted earnings per share (EPS) of $0.61.

In its earnings release, Semtech said revenue rose in all of its key focus areas, and portfolio optimization also helped boost the bottom line. It added that robust growth in bookings also helped, and its backlog hit a new all-time high.

An accelerating growth engine

Semtech also proffered guidance for its current (third) quarter. The company believes net sales for the period will be $405 million to $415 million, representing at least 52% year-over-year growth. Adjusted EPS should land at $1.02 to $1.08; even at the low end, this would be more than double third quarter 2026's $0.43.

Given the strong trailing results and the expected accelerating growth, it's little wonder that investors have been hot on Semtech stock since the earnings release.

Like other component makers benefiting from the intense build-out of artificial intelligence (AI) compute capacity, the company is well-positioned to reap the rewards. Unlike some of those peers, it clearly knows how to take good advantage of this.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.