Semtech, the semiconductor company, is targeting more than doubling its data center revenue in financial 2028 and 2029, as Baird reaffirmed its 'outperform' rating and $300 price target.
Baird said record bookings and strong visibility over the next 2 years supported the growth outlook, with Semtech positioned to benefit from rising demand for copper, fiber and optical connectivity.
The broker highlighted accelerating adoption of linear signal-integrity solutions, which reduce power consumption, latency, equipment size and costs compared with conventional retimed links.
Semtech's CopperEdge portfolio includes a 224-gigabits-per-second redriver already shipping, while management described its 336-gigabits-per-second device as the only solution currently performing in a hyperscaler application.
The 336-gigabits-per-second product consumes less than one-tenth of the power required by a retimed alternative, while extending copper connectivity for links between processors and other components.
Semtech's FiberEdge business has also increased its market share in 1.6-terabit connectivity to more than 50%, up from 18% at 800 gigabits, according to the broker's summary.
Baird expects the company to capture more value as data centers shift towards optical and photonic technologies to support faster connection speeds and greater bandwidth.
Semtech's photonics offering could save 40-50 milliwatts per 800-gigabit optical module, while its vertically integrated US supply chain supports opportunities in short-distance optical connections within data centers.
The broker also identified long-range radio technology LoRa as a significant growth driver, with projected annual sales growth of 30% implying revenue above $500 million by calendar 2029.
Semtech's financial framework for 2030 targets $3.2 billion in total revenue, excluding current sales from its system-on-module business, equivalent to a compound annual growth rate of 38% from financial 2026.
Data center revenue is expected to reach $2.1 billion by financial 2030, representing annualised growth of 75%, while management is targeting an adjusted gross margin of 70%.
The company is also targeting an adjusted operating margin of 48-50%, non-GAAP earnings per share of $12.40-$13 and a free cash flow margin of 35% by financial 2030.
Baird retained its Outperform rating on Semtech, citing demand for optical connectivity, gains in active copper cable and internet-of-things markets, and an improving revenue mix.
Editorial note: The source material gives two different periods for the data center revenue doubling forecast: financial 2028 and 2029 in the opening summary, but financial 2027 and 2028 in the 2030 framework section. The relevant forecast periods should be confirmed before publication.
