Semtech Corporation (Nasdaq: SMTC) reported record first-quarter fiscal 2027 results, underscoring the company’s growing exposure to AI-driven infrastructure spending and next-generation connectivity markets. The semiconductor supplier posted net sales of $291 million for the quarter ended April 26, 2026, marking a 6% sequential increase and 16% year-over-year growth, while adjusted diluted EPS climbed 34% year over year to $0.51.

The quarter marked Semtech’s ninth consecutive quarter of net sales growth, fueled by surging Demand across its Data Center optical networking portfolio and continued momentum in its LoRa-enabled IoT Business.

AI Data Center Business Emerges as Major Growth Engine

Semtech’s data center segment delivered record quarterly net sales of $71.6 million, up 14% sequentially and 39% year over year, as hyperscaler demand for high-speed optical interconnects continued to strengthen.

The company said growth was driven primarily by strong adoption of its 800G FiberEdge portfolio, including linear transimpedance amplifier (TIA) solutions and linear pluggable optics (LPO) products. Semtech noted that several leading hyperscalers in both the United States and China are already deploying its FiberEdge linear TIA and driver solutions.

Management expects momentum to accelerate sharply in the current quarter. Semtech is targeting approximately 35% sequential growth in data center Revenue during Q2 fiscal 2027, implying roughly 85% year-over-year expansion.

The company also highlighted increasing traction for its CopperEdge active copper cable (ACC) solutions and growing adoption of 1.6T optical architectures, which are expected to become major revenue contributors in the second half of fiscal 2027.

Chief Executive Officer Hong Hou said Semtech is benefiting from strong positioning across multiple layers of hyperscale networking infrastructure, including 800G, 1.6T, and emerging 3.2T optical deployments.

LoRa Business Continues Strong Recovery

Semtech’s LoRa-enabled business also posted another strong quarter, generating $44.9 million in revenue, up 12% sequentially and 14% year over year.

The company said demand was supported by expanding deployments across smart utilities, smart buildings, smart cities, industrial monitoring, and asset management applications.

Management expects LoRa momentum to continue accelerating, guiding for more than 15% sequential revenue growth in Q2 and targeting all-time-high LoRa revenue levels.

Semtech also emphasized the growing opportunity around edge AI deployments, where its next-generation LoRa Plus platform is enabling higher-bandwidth applications while maintaining ultra-low power consumption and long-range connectivity.

The company said LoRa Plus can now support advanced AI-enabled use cases including predictive maintenance, healthcare monitoring, smart security systems, and industrial sensing applications.

Q2 Outlook Signals Continued Momentum

For the second quarter of fiscal 2027, Semtech guided revenue to $328 million plus or minus $5 million, representing approximately 13% sequential growth and 27% year-over-year growth at the midpoint.

Adjusted diluted EPS is expected to reach $0.61 plus or minus $0.02, implying 20% sequential growth and a 49% increase from the prior year period.

The company also forecast adjusted gross Margin of 54% plus or minus 50 basis points, supported by favorable mix shifts toward higher-margin data center and LoRa products.

Semtech expects growth across all three major operating segments during the quarter, with particularly strong contributions from 800G and 1.6T optical products.

Portfolio Optimization and Strategic Investments Continue

Alongside accelerating revenue growth, Semtech said it continues to execute on portfolio optimization initiatives, including the planned divestiture of its cellular module business, which management said is now in the final stages of discussion.

The company is simultaneously ramping Investment in several strategic growth areas, including coherent optical networking, copper edge connectivity, and next-generation optical architectures.

Semtech recently completed the Acquisition of HieFo Photonics, adding indium phosphide photonic products that management believes will become critical building blocks for future 1.6T and 3.2T optical modules.

The company also said demand for its gain chips currently exceeds Supply, prompting ongoing capacity expansion initiatives.

Looking ahead, management expects AI infrastructure deployments and hyperscaler networking upgrades to drive accelerating demand throughout fiscal 2027 and beyond, positioning Semtech as a growing beneficiary of the expanding AI data center ecosystem.