Strength Seen in Allegro MicroSystems (ALGM): Can Its 8.7% Jump Turn into More Strength?

Allegro MicroSystems, Inc. ALGM shares rallied 8.7% in the last trading session to close at $39.53. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 2.3% gain over the past four weeks.

The optimism surrounding the stock can be attributed to strong growth in Allegro’s data center business, driven by rising demand for current sensors as AI server power requirements increase. Further, the company secured multiple data center and robotics design wins, while automotive bookings and design wins increased 30% year over year in the first quarter of fiscal 2027, are supporting the company's growth outlook.

This company is expected to post quarterly earnings of $0.25 per share in its upcoming report, which represents a year-over-year change of +92.3%. Revenues are expected to be $271.21 million, up 26.6% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Allegro MicroSystems, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on ALGM going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Allegro MicroSystems is part of the Zacks Electronics - Semiconductors industry. AXT AXTI, another stock in the same industry, closed the last trading session 5% higher at $85.87. AXTI has returned 45.6% in the past month.

AXT's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.31. Compared to the company's year-ago EPS, this represents a change of +1133.3%. AXT currently boasts a Zacks Rank of #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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