Semtech Soars as UBS Highlights AI Growth and Nvidia Partnership

Semtech Corporation (SMTC) shares surged on Friday after UBS initiated coverage of the company with a "Buy" rating and a price target of $85. The brokerage noted Semtech's CopperEdge product, which reduces noise at lower cost and power compared to digital chips, has secured a key win in Nvidia’s Blackwell platform. The CopperEdge total addressable market is estimated at $100 million, with additional opportunities from AMD and hyperscalers. UBS also pointed to Semtech's FiberEdge product, which targets fiber connections for AI cluster networking and is expected to follow CopperEdge’s adoption path, with Nvidia leading and hyperscalers likely to follow.

Semtech's share price jumped 8% following UBS's coverage initiation, reflecting investor enthusiasm for the company's growth prospects in the AI market. Semtech's partnership with Nvidia, a leading player in AI and graphics processing units (GPUs), is expected to drive significant growth for the company. The partnership will enable Semtech to leverage Nvidia's expertise in AI and GPU technology to develop innovative solutions for AI networking and data center applications.

Semtech's AI networking strategy is centered around its CopperEdge and FiberEdge products, which provide high-speed, low-latency, and efficient data transmission for AI applications. These products enable faster data processing and improved performance, making them ideal for AI workloads. Semtech's partnership with Nvidia will further enhance its AI networking capabilities and expand its reach in the AI market.

In addition to its AI networking strategy, Semtech is also well-positioned in the data center market. The company's products are used in various data center applications, including data center interconnect, server connectivity, and storage networking. Semtech's partnership with Nvidia will enable the company to offer more comprehensive solutions for data center customers, further driving its growth in this market.

Semtech's strong performance in the AI and data center markets is reflected in its financial results. The company reported revenue of $236.8 million in the third quarter of 2025, up 18% year-over-year (YoY), driven by broad-based growth across all end markets. The company's data center segment grew by 58% sequentially, reflecting increasing demand tied to AI. Semtech's adjusted earnings per share (EPS) of 23 cents in the third quarter beat consensus estimates by 1300 basis points, and the company's guidance for the fourth quarter indicates strong growth ahead.

Semtech's partnership with Nvidia is a significant milestone for the company, as it opens up new opportunities in the AI and data center markets. The partnership will enable Semtech to leverage Nvidia's expertise in AI and GPU technology to develop innovative solutions for AI networking and data center applications. Semtech's strong performance in the AI and data center markets, combined with its partnership with Nvidia, positions the company for continued growth and success in the years ahead.