Semtech 2026 Q2 Earnings Beats Expectations, Net Loss Narrows 84.1%

Semtech reported strong second-quarter fiscal 2026 results, beating Wall Street’s expectations with revenue and earnings per share that exceeded forecasts. The company also raised its Q3 revenue guidance and provided positive forward-looking metrics, signaling confidence in its business momentum.

Revenue for the quarter reached $257.59 million, a 19.6% increase from the prior year and well ahead of the $256 million consensus. The earnings release was accompanied by analyst upgrades and a 16.7% post-earnings stock surge, reflecting optimism around Semtech’s strategic focus in high-growth markets.

Revenue
Driven by robust demand in data centers and industrial and consumer markets, Semtech’s total revenue grew 19.6% year-over-year to $257.59 million. A significant contributor to this growth was the company’s data center segment, which saw an impressive 92% year-over-year increase in net sales, reaching $52.2 million. This performance was attributed to strong adoption of Semtech’s CyberEdge, FiberEdge, and CopperEdge product lines. Meanwhile, the company’s LoRa IoT business also posted a 29% year-over-year increase, generating $36.9 million in revenue. The combined momentum across these segments underscores Semtech’s strategic positioning in high-growth semiconductor applications.

Earnings/Net Income
Semtech’s financial turnaround continued as it narrowed its net loss to $27.06 million in Q2 2026, a reduction of 84.1% compared to $170.29 million in the same period last year. On a per-share basis, the company reduced its loss to $0.31 from $2.61, representing an 88.1% improvement. These figures highlight the company’s ongoing deleveraging strategy and cost optimization efforts, contributing to a 53.2% improvement in liquidity and margins.

Price Action
The stock price of Semtech experienced a notable upward trend, rising 7.62% during the latest trading day, 20.97% for the week, and 10.65% month-to-date. The 16.7% post-earnings jump underscored the positive investor sentiment surrounding the company’s improved financial performance and strategic direction.

Post-Earnings Price Action Review
Semtech’s strong Q2 performance, marked by a near fourfold increase in adjusted earnings per share and a 19.6% revenue gain, reflected the company’s strategic focus on high-growth markets such as data centers and IoT. The stock’s 16.7% surge following the earnings report highlighted investor confidence in Semtech’s turnaround. Analysts attributed this optimism to the company’s aggressive deleveraging, expanding presence in AI-driven infrastructure, and momentum in its FiberEdge business. Despite broader market concerns around inflation and potential tariffs, Semtech’s improved financials and forward-looking guidance for Q3 2026 suggest resilience and long-term growth potential.

CEO Commentary
Hong Q. Hou, President and CEO, highlighted the company’s record Q2 net sales and sequential improvements in gross profit and earnings per share. He emphasized progress on reducing debt by $879 million, focusing investment on core assets like data center, LoRa, and PerSe, and fostering a culture of customer intimacy and execution. Hou expressed confidence in the company’s growth trajectory, particularly in the data center space, where demand for FiberEdge, CopperEdge, and LPO solutions is expected to rise due to increasing bandwidth needs and low-power trends.

Guidance
Semtech provided Q3 2026 guidance, projecting net sales of $266 million, plus or minus $5 million. The company anticipates an adjusted gross margin of 53.0% plus or minus 50 basis points, with an adjusted operating margin expected to reach 19.6% at the midpoint. Adjusted EBITDA is forecasted at $60 million, plus or minus $3 million, and adjusted diluted earnings per share are expected to be $0.44, plus or minus $0.03.

Additional News
Following the release of its Q2 results, Semtech’s stock surged 16% as Wall Street analysts upgraded their outlook. Piper Sandler raised its price target to $65, citing strong contributions from the FiberEdge business, while Stifel lifted its target to $57, highlighting the company’s successful turnaround. Benchmark reiterated a “Buy” rating with a $68 price target. Craig-Hallum also joined the bullish trend, increasing its price target to $62 and emphasizing Semtech’s growing influence in the AI data center market. The firm noted that upcoming ramps in Linear Packet Optical (LPO) and Transimpedance Amplifier (TIA) products, along with Active Copper Cable (ACC) deployments across three major hyperscalers, would significantly boost growth in 2026. Additionally, Semtech’s LoRa business is now projected to deliver between $30 million and $40 million in quarterly revenue, up from a previous forecast of $30 million to $35 million. With its stock up 31% over the past six months and Tuesday’s 16% surge, Semtech has captured significant investor attention.