CK Capital
Defense/Space/Tech/Photonics Investor, Co-Owner of CV Research
Semtech is gaining share in a growing market, with content per unit about to jump and a higher-margin business left after its divestiture. FiberEdge's 800G share rose from 18% to over 50% as transceiver units roughly tripled, and it expects over 50% of 1.6T this year. Content per transceiver rises from high single digits to $80-90 as the industry moves to 3.2T in 18-24 months. Gross margin should start at 64% after the cellular module sale, versus 53% two quarters ago. x.comÂ
Semtech is a $200 stock trading at $136 because its customers care about availability, not price. Its CEO said it is designed into every module provider in its markets, several sole-source, and sees no near-term price erosion. FiberEdge took 800G share from 18% to over 50% as the market grew toward 90 million units. Data-center revenue rose 91% to $100 million, backlog is full this year and 70% booked next, and divesting cellular modules lifts gross margin to about 64%. x.com x.com x.comÂ
Semtech's high-power lasers offer upside because its fiscal 2030 target counts only a very moderate contribution from them. Management says data-center revenue will more than double this year and next on backlog; it plans to grow laser capacity three to four times by year-end as demand exceeds supply. Around $140, shares trade near 11 times Semtech's $12.40-$13 fiscal 2030 adjusted EPS target. Qualification and shipments must make the laser ramp credible in fiscal 2029-30. x.com x.comÂ
Semtech benefits as larger AI clusters need faster, more efficient links between GPUs and switches, which its CopperEdge and FiberEdge chips supply. Data center revenue rose 91% year over year. The stock keeps setting all-time highs despite a broad semiconductor sell-off and tops US semiconductors by Momentum Score at 99, ahead of AMD and NVIDIA. x.comÂ
Semtech's valuation already assumes strong execution, so the stock needs growth to keep pace with a fast-expanding optical market. It is one of the few names with real products across all three AI networking layers, from scale-up copper to scale-out optics chips and, via the HieFo laser deal, scale-across. FY26 data center revenue rose 58% to $223M, with over 50% growth guided for FY27. BofA sees the optical market growing from $14B in 2025 to $73B by 2030, a pace that would ease the multiple. … Show more
Semtech remains a Buy with a $162 target at 22x FY28 EPS, as AI demand runs about three times its supply capacity. F2Q revenue rose 33% YoY to $341.9M, EPS of $0.71 beat $0.61, gross margin hit a record 54.5%, and F3Q guidance of $410M revenue and $1.02-1.08 EPS tops estimates. 1.6T CopperEdge ACC is now in mass shipment to major hyperscalers, and FiberEdge targets over 50% of its 1.6T market by end-FY27. SiGe/InP wafer and packaging limits are the bottleneck; FY28 EPS is forecast at $7.40. … Show more
Semtech's analyst-day growth outlook makes the stock look cheap if guidance holds. Management guided to $3.2B FY30 revenue at 38% CAGR and estimated 70% gross and 48-50% operating margins. Backlog alone underpins more than doubling datacenter revenue in FY27 and FY28, versus the 80% and 70% previously modeled; LoRa's 30% CAGR tops the prior 20% assumption. Later forecasts are more conservative, so growth could beat 38%. At 25x FY30 earnings (January 2030), the stock should trade at $320. x.com … Show more
Semtech's AI interconnect story has turned from multiple emerging bets into an explicit FY27 product stack. 800G remains durable, LPO has started shipping, ACC/CopperEdge enters production shipment this quarter, and HieFo offers a path to much higher content at 3.2T while being accretive in year one. Q1 guidance beat the Street on revenue, gross margin and EPS. The case weakens if, by summer, Semtech still cites design activity rather than measurable revenue from ACC, 1.6T FiberEdge or HieFo. … Show more
Rising 1.6T switching demand favors optical suppliers, though their execution risks vary. Bank of America says the market could grow ~101% annually through 2030. Marvell's leading DSPs and Lumentum's supply-short 200G EML lasers are lowest risk; Applied Optoelectronics' capacity expansion and Fabrinet's customer concentration make them medium risk. Aeluma remains pre-commercial, while Lightwave Logic's polymer modulators are a high-risk moonshot despite its TSM partnership. x.comÂ
Optical transceiver demand exceeds supply, and 1.6T lifts revenue per module for suppliers able to qualify capacity. Applied Optoelectronics raised at least $1.62B through 2026 ATMs; its last reported monthly capacity was 200,000 modules versus a year-end target above 650,000. Credo expects over $600M in FY2027 revenue across optical DSPs, PICs and modules, not modules alone. Shipments, yields and margins must prove out. Lumentum and Coherent already price in much expected growth. x.comÂ
Semtech is a lower-risk way to play the photonics volume ramp, since it sells the chips inside transceivers that makers like AAOI build. Q2 upside came from 1.6T qualifying early, and 800G TIA share rose from ~18% to over 50%, with >50% expected at 1.6T by January. Content per transceiver jumps from high single digits to $80-90 at 3.2T, which the market hasn't modelled. The CEO says secured capacity may not be enough for FY28, pricing holds, and gross margin starts near 64%. x.com x.comÂ
Even half of a rumored jump in Applied Optoelectronics' transceiver shipments would be well above what is priced in. A Substack claims 800G shipments will rise from about 600,000-700,000 to about 5 million next year, plus about 100,000 1.6T units a month; the rumor is low-confidence. x.comÂ
