Semtech Corporation SMTC shares gained 8.5% during Tuesday’s extended trading session after the company reported better-than-expected first-quarter fiscal 2027 results.
Semtech posted non-GAAP earnings of 51 cents per share, which beat the Zacks Consensus Estimate by 13.3%. The bottom line exceeded the management’s guidance of 45 cents (+/- 3 cents) and reflected a robust year-over-year improvement of approximately 34.2%.
Semtech beat on earnings in each of the trailing four quarters, the average surprise being 6.8%.
SMTC’s first-quarter fiscal 2027 revenues of $291 million topped the Zacks Consensus Estimate by 2.7% and came above management’s guidance of $283 million (+/- $5 million). The top line jumped 16% year over year, with solid growth across all of its end markets, particularly in data centers.
Semtech Corporation Price, Consensus and EPS Surprise
Semtech Corporation price-consensus-eps-surprise-chart | Semtech Corporation Quote
Semtech’s Q1 Revenues in Terms of End Markets
The company’s top-line performance can be attributed to the impressive year-over-year rise in its end markets.
Sales from the infrastructure market totaled $98.8 million (33.9% of net sales), exhibiting year-over-year growth of 36%, supported by the expanding data center business. A key highlight was record data center net sales of $71.6 million, rising 39% year over year, reflecting continued strength in high-speed interconnect solutions.
Sales from the industrial market amounted to $153.9 million (52.9% of net sales), up 8% year over year.
Sales from the high-end consumer market totaled $38.4 million (13.2% of net sales), up 8% year over year, as the company cited resilience and continued design win momentum.
SMTC's LoRa Growth Adds Another Engine
LoRa-enabled net sales were $44.5 million, up 12% sequentially and 14% year over year, reflecting broader adoption across smart utilities, smart buildings, smart cities and asset management.
The company is positioning its fourth-generation LoRa platform to expand use cases by combining dual-band capability with higher data throughput, while maintaining the low-power attributes that underpin long-battery-life deployments.
SMTC’s Q1 Revenues in Terms of Product Lines
Signal Integrity (35.1% of net sales) sales totaled $102 million, up 38.8% year over year. Analog Mixed Signal & Wireless (34.6% of net sales) sales amounted to $100.8 million, which rose 11.3% year over year.
IoT System and Connectivity (30.3% of net sales) sales totaled $88.3 million, up 1.6% on a year-over-year basis.
Semtech’s Margins in Details
The non-GAAP gross margin of 53% contracted 50 basis points (bps) on a year-over-year basis and expanded 140 bps sequentially.
Non-GAAP operating income increased 24.6% year over year to $59.3 million. The non-GAAP operating margin expanded to 20.4% from 19% reported in the year-ago quarter. On a quarter-over-quarter basis, non-GAAP operating income increased 18.6%, while margin expanded 220 basis points.
Semtech’s Balance Sheet & Cash Flow
As of April 26, 2026, cash and cash equivalents totaled $163.3 million, down from $195.2 million as of Jan. 25, 2026.
The long-term debt amounted to $492 million, up from the previous quarter’s reported figure of $491.2 million.
During the first quarter, Semtech generated operating cash flow and free cash flow of $36.2 million and $28 million, respectively.
Semtech Initiates Q2 FY27 Guidance
For the second quarter of fiscal 2027, Semtech expects net sales to be $328 million (+/- $5 million). The Zacks Consensus Estimate is pegged at $299.5 million, indicating a year-over-year rise of 16.3%.
The non-GAAP gross margin is expected to be 54% (+/- 50 bps). The non-GAAP operating margin is anticipated to be 21.9% (+/- 40 bps).
Non-GAAP earnings are expected to be 61 cents (+/- 2 cents) per share. The consensus mark for earnings is pegged at 52 cents per share, indicating a year-over-year rise of 26.8%.
SMTC’s Zacks Rank and Other Stocks to Consider
Currently, Semtech carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader Zacks Computer and Technology sector are Applied Materials AMAT, Celestica CLS and Amphenol APH, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Applied Materials have gained 77.1% year to date. The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 earnings is pegged at $12.02 per share, up 9 cents over the past seven days, indicating a year-over-year surge of 27.6%.
Shares of Celestica have gained 25.1% year to date. The Zacks Consensus Estimate for Celestica’s 2026 earnings is pegged at $10.16 per share, up 15.1% over the past 30 days, indicating a year-over-year jump of 67.9%.
Amphenol shares have jumped 3.3% year to date. The Zacks Consensus Estimate for APH’s 2026 earnings is pegged at $4.76 per share, up 11.4% over the past 30 days, indicating a year-over-year increase of 42.5%.
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This article originally published on Zacks Investment Research (zacks.com).