Semtech shares rallied Tuesday after an investment bank pounded the table for the beaten-down semiconductor stock. The firm called Semtech stock a "hidden gem."
Baird analyst Tristan Gerra labeled Semtech stock a "bullish fresh pick" in a client note. He rates the stock as outperform with a price target of 40.
On the stock market today, Semtech stock jumped 13% to close at 25.17. But that's a far cry from its all-time high of 94.92, reached in November 2021.
Gerra said he became more optimistic about the company's prospects after meetings at the Optical Fiber Communication 2024 conference in San Diego. Semtech makes high-performance networking and connectivity semiconductor products and systems.
Semtech Stock Seen Profiting From AI Ramp
"We believe Semtech is very well positioned with the upcoming ramp of new AI platforms as one of two players in the space qualified for high-density copper interconnect," Gerra said. "Semtech is also well positioned with 800G modules in AI architectures."
Next-generation optical links, including linear drive pluggable optics or LPOs, represent another significant catalyst for the company, Gerra said.
"Semtech is a classic turnaround story," Gerra said. The company has new leadership focused on leveraging its strength in optical networking, he said.
The next potential catalyst for Semtech stock will be the company's fiscal fourth-quarter report due late Thursday.
Semtech ranks No. 17 out of 39 stocks in IBD's fabless semiconductor industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 40 out of 99.
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