Semtech's Q2 Earnings Surpass Estimates, Revenues Increase Y/Y

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Semtech's Q2 Earnings Surpass Estimates, Revenues Increase Y/Y Zacks Equity Research Wed, August 26, 2026 at 9:45 AM EDT 5 min read AMAT SMTC NVDA LRCX Semtech Corporation SMTC shares gained 4% during Tuesday's extended trading session after the company reported better-than-expected second-quarter fiscal 2027 results. Semtech posted non-GAAP earnings of 71 cents per share, which beat the Zacks Consensus Estimate by 14.5%. The bottom line exceeded management's guidance of 61 cents (+/-2 cents) and reflected a robust year-over-year improvement of approximately 73.2%. Semtech beat on earnings in each of the trailing four quarters, the average surprise being 9.8%. SMTC's second-quarter fiscal 2027 revenues of $341.9 million topped the Zacks Consensus Estimate by 4.1% and came above management's guidance of $328 million (+/- $5 million). The top line jumped 32.7% year over year. Semtech Corporation price-consensus-eps-surprise-chart | Semtech Corporation Quote Sales from the infrastructure market totaled $123.7 million (36.2% of net sales), exhibiting year-over-year growth of 69%, supported by the expanding data center business. The increase reflected continued strength in 800G products and the early ramp of 1.6T FiberEdge and CopperEdge solutions. Sales from the industrial market amounted to $178.9 million (52.3% of net sales), up 25.1% year over year. Sales from the high-end consumer market totaled $39.2 million (11.5% of net sales), down 4.6% year over year. Signal Integrity (36.9% of net sales) sales totaled $126.2 million, up 64.3% year over year. Analog Mixed Signal & Wireless (34.3% of net sales) sales amounted to $117.4 million, which rose 27.6% year over year. IoT System and Connectivity (28.8% of net sales) sales totaled $98.3 million, up 10.7% on a year-over-year basis. FiberEdge demand remained strong across leading hyperscalers, and Semtech said it is designed into every major module provider in its target markets. The company expects 1.6T FiberEdge market share to exceed 50% by the end of fiscal 2027 and is engaged in CopperEdge design-ins at bandwidths up to 3.2T. LoRa-enabled sales set another record at $58 million, up 58% year over year. The company cited expansion across smart utilities, buildings, cities and asset management, while Amazon Sidewalk is expanding internationally after Ring's U.S. launch of LoRa-based sensors. Semtech is also expanding photonics capacity, with high-power CW laser revenues expected to begin in the first half of fiscal 2028. The non-GAAP gross margin of 54.5% expanded 130 basis points (bps) on a year-over-year basis and 150 bps sequentially. Non-GAAP operating income increased 72% year over year to $83.6 million. The non-GAAP operating margin expanded to 24.4% from 18.8% reported in the year-ago quarter. On a quarter-over-quarter basis, non-GAAP operating income increased 41%, while margin expanded 400 basis points. As of July 26, 2026, cash and cash equivalents totaled $204.1 million, up from $163.3 million as of April 26, 2026. The long-term debt amounted to $394.4 million, down from the previous quarter's reported figure of $492 million. During the second quarter, Semtech generated operating cash flow and free cash flow of $68.9 million and $61.4 million, respectively. For the third quarter of fiscal 2027, Semtech expects net sales to be $410 million (+/- $5 million). The Zacks Consensus Estimate is pegged at $357.1 million, indicating a year-over-year rise of 33.7%. The non-GAAP gross margin is expected to be 58.3% (+/- 100 bps). The non-GAAP operating margin is anticipated to be 31% (+/- 60 bps). Non-GAAP earnings are expected to be $1.05 (+/- 3 cents) per share. The consensus mark for earnings is pegged at 73 cents per share, indicating a year-over-year rise of 52.1%. Currently, Semtech carries a Zacks Rank #2 (Buy). Some other top-ranked stocks worth considering in the broader Zacks Computer and Technology sector are Applied Materials AMAT, Lam Research LRCX and NVIDIA NVDA, each carrying a Zacks Rank #2 at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. The Zacks Consensus Estimate for Applied Materials' fiscal 2026 earnings is pegged at $12.73 per share, up 8 cents over the past seven days, indicating a year-over-year surge of 35.1%. Applied Materials shares have surged 86.7% year to date (YTD). The Zacks Consensus Estimate for Lam Research's fiscal 2027 earnings has moved northward by 17.8% to $9.32 per share over the past 30 days and calls for a year-over-year jump of 60.4%. Lam Research shares have soared 83.8% YTD. The Zacks Consensus Estimate for NVIDIA's fiscal 2027 earnings has moved upward by 2 cents to $8.92 per share in the past seven days, implying a year-over-year increase of 87%. NVIDIA shares have risen 14.6% YTD. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Semtech Corporation (SMTC) : Free Stock Analysis Report NVIDIA Corporation (NVDA) : Free Stock Analysis Report Lam Research Corporation (LRCX) : Free Stock Analysis Report Applied Materials, Inc. (AMAT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com).

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