Highlights

  • Semtech shares were trading at $132.00 on October 23, 2026, up 5.50%.
  • Fiscal second-quarter net sales rose 32.7% to $341.9 million, from $257.6 million a year earlier, led by data center demand.
  • The company swung to net income of $160.1 million, or $1.59 per diluted share, from a net loss of $27.1 million a year earlier.
  • The swing was driven largely by a $112.4 million non-cash tax benefit from releasing a portion of its U.S. deferred tax valuation allowance.

Semtech (NASDAQ: SMTC) shares were trading at USD 132.00 on October 23, 2026, up 5.50%. The semiconductor maker reported fiscal second-quarter results showing broad-based sales growth across its segments and a large one-time tax benefit that pushed the company to GAAP profitability.

Headquartered in Camarillo, California, and incorporated in Delaware in 1960, Semtech describes itself as a leading provider of high-performance semiconductors powering AI data center networking and intelligent, connected Internet of Things devices worldwide. The company operates three reportable segments: Signal Integrity, which includes optical and copper data communications and video transport products; Analog Mixed Signal and Wireless, which includes protection devices and specialized radio frequency products such as its LoRa line; and IoT Systems and Connectivity, which provides modules, gateways, routers and connected services. The results discussed here cover the three months ended July 26, 2026, the second quarter of Semtech’s fiscal 2027.

Data Center Demand Drives Broad-Based Sales Growth

Net sales for the quarter were $341.9 million, up 32.7% from $257.6 million a year earlier. Semtech said the increase was primarily driven by stronger demand and sales volume in its infrastructure and industrial end markets. Net sales from the infrastructure end market increased $50.4 million, primarily on an approximately $47.4 million increase in data center sales, while sales from the industrial end market increased $35.8 million, led by a roughly $21.3 million increase in LoRa-enabled industrial sales and an $11.7 million increase in IoT hardware sales. Sales from the high-end consumer end market declined $1.9 million. By segment, Signal Integrity net sales increased $49.4 million on data center strength, Analog Mixed Signal and Wireless increased $25.3 million on LoRa and protection-product demand, and IoT Systems and Connectivity increased $9.6 million.

Gross profit rose to $183.8 million from $134.1 million, with the largest contribution coming from Signal Integrity. Operating income was $55.8 million, compared with an operating loss of $16.2 million in the prior-year quarter, which had included a $42.0 million goodwill impairment charge and $1.5 million of restructuring costs; the current quarter included a small restructuring credit.

One-Time Tax Benefit Drives the Swing to Net Income

Semtech recorded an income tax benefit of $101.4 million in the quarter, compared with an income tax expense of $4.8 million a year earlier. The change was primarily attributable to the release of a portion of the company’s U.S. deferred tax valuation allowance, which generated a $112.4 million non-cash tax benefit. Management said the release reflected sustained profitability, a cumulative three-year pre-tax income position, and forecasts of future taxable income sufficient to support realization of the related deferred tax assets; the company had maintained a full valuation allowance against its U.S. deferred tax assets since the second quarter of its fiscal year 2024. As a result of this benefit and the improved operating performance, net income was $160.1 million, or $1.59 per diluted share, compared with a net loss of $27.1 million, or $0.31 per share, a year earlier. Semtech continues to maintain valuation allowances against certain deferred tax assets in France and Canada.

Six-Month Results Also Show Higher Volumes

For the first six months of fiscal 2027, net sales were $632.9 million, up 24.4% from $508.6 million in the comparable period of fiscal 2026, again led by data center and LoRa-related demand across the infrastructure and industrial end markets.