Semtech (SMTC) AI Stock Analysis

• Market Cap: $3.48B
• Dividend Yield: N/A
• Average Volume (3M): 2.32M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.08
• Revenue Growth: 4.66%
• EPS Growth: 84.78%
• Country: US
• Employees: 1,838
• Sector: Technology
• Sector Strength: 76
• Industry: Semiconductors
• EPS (TTM): 0.40
• Shares Outstanding: 86,622,840
• 10 Day Avg. Volume: 1,597,841
• 30 Day Avg. Volume: 2,322,102
• PEG Ratio: -0.22
• Price to Book (P/B): 5.26
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 61.07
• Enterprise Value/Market Cap: 0.99
• Enterprise Value/Revenue: 1.01
• Enterprise Value/Gross Profit: 7.55
• Enterprise Value/Ebitda: -1.50
• 1Y Price Target: $50.56
• Price Target Upside: 31.29% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 11

• Rating: 49 Neutral
• Price Target: $40.00 ▲( 3.87% Upside)

Semtech's overall stock score reflects a challenging financial landscape marked by profitability and cash flow issues, as well as technical weakness. Despite these challenges, the earnings call provided a more optimistic outlook with revenue growth and significant debt reduction, offering potential upside. However, the negative valuation metrics and bearish technical indicators weigh heavily on the stock's attractiveness.

Positive Factors

Customer engagement

Semtech is engaging with over 20 potential customers for various applications, suggesting a promising future for new business opportunities.

Financial performance

Semtech posted sales ahead of its original guidance and street consensus, demonstrating the company's strong performance and financial health.

Growth prospects

Investors can now focus on SMTC's broader portfolio strength, including its leadership in optical components for AI connectivity applications, which significantly boosted its Data Center business and other sectors.

Negative Factors

Management challenges

Semtech stock has been weighed down by several recent mishaps - leverage from the Sierra Wireless acquisition, a change in management, and prior management team forecasting a data center win that didn't pan out.

Market conditions

Their broad based portfolio of IoT and consumer semis/hardware are exposed to the volatile macro conditions and will be impacted by the recently introduced tariffs.

Product challenges

Revenue for the CopperEdge product line should be less than $50MM in FY26 due to architectural rack changes at NVIDIA.

Semtech Business Overview & Revenue Model

Company Description

Semtech Corporation designs, develops, manufactures, and markets analog and mixed-signal semiconductor products and advanced algorithms. It provides signal integrity products, including a portfolio of optical data communications and video transport products used in various infrastructure, and industrial applications; a portfolio of integrated circuits for data centers, enterprise networks, passive optical networks, wireless base station optical transceivers, and high-speed interface applications; and video products for broadcast applications, as well as video-over-IP technology for professional audio video applications. The company also offers protection products, such as filter and termination devices that are integrated with the transient voltage suppressor devices, which protect electronic systems from voltage spikes; and wireless and sensing products comprising a portfolio of specialized radio frequency products used in various industrial, medical, and communications applications, as well as specialized sensing products used in industrial and consumer applications. In addition, it provides power products consisting of switching voltage regulators, combination switching and linear regulators, smart regulators, isolated switches, and wireless charging that control, alter, regulate, and condition the power within electronic systems. The company serves original equipment manufacturers and their suppliers in the enterprise computing, communications, and consumer and industrial end-markets. It sells its products directly, as well as through independent sales representative firms and independent distributors in North America, Europe, Asia- Pacific, and internationally. The company was incorporated in 1960 and is headquartered in Camarillo, California.

How the Company Makes Money

Semtech makes money primarily through the sale of its semiconductor products and solutions. Revenue is generated from multiple key streams, including sales of signal integrity circuits, which are essential in high-speed communications and data centers; wireless and sensing solutions, which cater to IoT applications; and power management and protection devices, which are crucial for consumer electronics and industrial applications. The company benefits from strategic partnerships and collaborations with major technology firms, enhancing its market reach and customer base. Additionally, Semtech's focus on innovation and development of cutting-edge technology contributes significantly to its earnings by keeping its product offerings aligned with industry demands.

Semtech Financial Statement Overview

Summary

Semtech faces profitability and cash flow challenges despite some improvement in financial stability in 2025. High leverage and negative net income are key concerns. The company needs to enhance its revenue growth and profitability to ensure long-term sustainability.

Income Statement

The company shows a declining revenue trend with a slight increase in 2025. Gross profit margin improved significantly in 2025, but net income remains negative, affecting the net profit margin adversely. EBIT and EBITDA margins are also low, indicating profitability challenges.

Balance Sheet

High debt-to-equity ratio indicates significant leverage, posing financial risks. However, the equity ratio improved as equity turned positive in 2025, suggesting better financial stability. Return on Equity remains negative due to persistent net losses.

Cash Flow

Operating cash flows are weak, with a significant drop in free cash flows over the years. The company's cash flow management needs substantial improvement to support ongoing operations and reduce financial strain.

Breakdown
Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement		Total Revenue
909.29M	868.76M	756.53M	740.86M	595.12M
	Gross Profit
456.53M	296.25M	478.56M	466.08M	363.55M
	EBIT
49.93M	-944.32M	92.80M	145.02M	74.96M
	EBITDA
115.07M	-851.10M	130.82M	180.41M	100.18M
	Net Income Common Stockholders
-161.90M	-1.09B	61.38M	125.66M	59.90M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
151.74M	143.13M	235.51M	279.60M	268.89M
	Total Assets
1.42B	1.37B	2.57B	1.13B	1.08B
	Total Debt
551.50M	1.40B	1.34B	175.65M	179.19M
	Net Debt
399.80M	1.27B	1.10B	-103.95M	-89.70M
	Total Liabilities
876.84M	1.68B	1.81B	393.14M	383.15M
	Stockholders Equity
542.43M	-307.43M	755.85M	737.58M	698.74M
Cash Flow		Free Cash Flow
43.78M	-125.02M	98.39M	176.94M	86.20M
	Operating Cash Flow
57.99M	-93.92M	126.71M	203.12M	118.93M
	Investing Cash Flow
-11.89M	-22.70M	-1.25B	-40.32M	-42.91M
	Financing Cash Flow
0.00	10.55M	1.08B	-152.10M	-100.45M

Semtech Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 38.51
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SMTC, the sentiment is Neutral. The current price of 38.51 is above the 20-day moving average (MA) of 35.33, above the 50-day MA of 33.76, and below the 200-day MA of 45.31, indicating a neutral trend. The MACD of 2.18 indicates Negative momentum. The RSI at 61.57 is Neutral, neither overbought nor oversold. The STOCH value of 78.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SMTC.

Semtech Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CAMT	79 Outperform	$2.98B	24.70	24.82%	2.02%	32.63%	46.16%
SYNA	74 Outperform	$2.46B	15.75	12.60%	―	10.60%	―
SLAB	66 Neutral	$4.16B	―	-14.77%	―	2.16%	-55.38%
Sector *	60 Neutral	$11.56B	10.24	-7.04%	2.94%	7.46%	-10.54%
SITM	58 Neutral	$4.88B	―	-12.78%	―	65.85%	7.92%
POWI	55 Neutral	$2.97B	81.31	5.03%	1.55%	-5.75%	-41.75%
SMTC	49 Neutral	$3.48B	―	-137.83%	―	4.66%	84.78%

Semtech Corporate Events

Semtech Expands Credit Facility by $117.5 Million

On April 24, 2025, Semtech Corporation amended its existing credit agreement to increase its revolving credit facility by $117.5 million, bringing the total to $455 million. This amendment, which involved three new institutions joining the lending group, partially replaces borrowing capacity that matured in November 2024. Additionally, the company announced a $10 million prepayment on its term loan using cash flow from operations, aligning with its capital allocation priority to reduce leverage.

Semtech Reports Strong Q4 and Fiscal Year 2025 Results

Semtech Corporation reported its financial results for the fourth quarter and fiscal year 2025, ending January 26, 2025, showing a positive trajectory with net sales of $251 million for the quarter, a 6% sequential increase, and $909.3 million for the fiscal year, a 5% increase from the previous year. The company achieved improvements in gross margin, operating margin, and earnings per share, and reduced its net debt by 68% year-over-year, positioning itself for long-term growth through strategic investments and portfolio optimization.

Semtech Announces Executive Team Change with Russell’s Departure

On February 20, 2025, Semtech Corporation announced a Separation and General Release Agreement with Mark P. Russell, the Senior Vice President of Global Sales and Marketing, whose last day will be March 6, 2025. The agreement includes a severance package with a lump sum payment and a bonus for fiscal year 2025, indicating a strategic change in the company’s executive team that could impact its sales and marketing operations.