Baird predicts 80% surge for this ‘hidden AI gem’

Semtech: The Hidden AI Gem Flying Under Wall Street’s Radar

Semtech is a semiconductor manufacturer that is gaining attention as a “hidden AI gem” that is not receiving the recognition it deserves from Wall Street. Baird recently added Semtech to its “fresh pick” list and reiterated its outperform rating, setting a $40 price target that suggests nearly 80% upside potential from the previous day’s close.

What makes Semtech stand out is its focus on high-performance semiconductors, internet of things systems, and cloud connectivity services. Analyst Tristan Gerra believes that Semtech is well-positioned to benefit from the upcoming ramp of new AI platforms, thanks to its unique position as one of two players in the space qualified for high-density copper interconnect.

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Furthermore, Semtech is expected to see a strong ramp of linear-drive pluggable optics (LPOs) next year, where it is anticipated to emerge as a leader in the space. There is also expected to be a new wave of optical investments in the second half of 2025, with Semtech firmly established as the leader due to its time to market, product performance, and depth of customer relationships.

Despite its promising growth prospects, Semtech’s stock performance has been somewhat lackluster, with shares down 25% over the past 12 months. However, Baird’s bullish outlook on the company’s future potential highlights the significant discrepancy between Semtech’s actual capabilities and the market’s perception of the stock.

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In conclusion, Semtech presents itself as a classic turnaround story with strong growth potential in the semiconductor industry. As the market begins to appreciate the company’s innovative technologies and market positioning, Semtech could be set for a successful upward trajectory in the coming months.

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