Stock of the Day: Semtech surges 13% with huge data center demand a bright spot in slumping AI trade
The semiconductor firm issued strong guidance after reporting a boom in its data center revenue last quarter.
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- Semiconductor firm Semtech rose 13% in premarket trading on Friday.
- The semiconductor firm issued an earnings beat and strong first-quarter guidance.
- Data centers are expected to lead earnings strength, the firm said.
The move: Semtech jumped 13.12% on Thursday, rising to $37 per share. The positive pre-market move will ease the stock's 47% year-to-date loss.
Why: The semiconductor firm surprised investors with an upside earnings report, posting guidance that suggests strength in AI data center demand.
The US chipmaker's fourth-quarter net sales reached $251 million, above $249 million consensus estimates and a 30% upshot from last year's figure. According to CEO Hong Hou data center net sales hit a record of $50 million, up 16% sequentially and 183% year-to-year.
Current-quarter revenue is also expected to come in strong, reaching $250 million.
"We expect net sales from the infrastructure end market to increase sequentially with data center applications leading to growth," executive vice president Mark Lin said in the earnings call.
What it means: The firm's performance offers a silver lining for a sector plagued by uncertainty and growing bearishness.
Chipmakers have logged some of the biggest losses during the recent stock rout as investors reassess their exposure to US tech companies.
Competition from Chinese firms has fueled doubt over massive spending on AI infrastructure, including data centers. Nvidia, the dominant AI hardware company, is down 16% year-to-date.
Semtech has also been among those crushed in 2025. While the firm traded as high as $77 per share this year, it fell dramatically last month after readjusting fiscal year 2026 guidance. That's after a server rack customer — said to be Nvidia — no longer demanded Semtech's CopperEdge products.
