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On Tuesday, Semtech (SMTC) shares soared after an investment bank expressed confidence in the semiconductor company. The firm identified Semtech stock as a “hidden gem.” Baird analyst Tristan Gerra recently recommended Semtech stock as a “bullish fresh pick” in a note to clients. He has an outperform rating on the stock with a price target of 40. Despite the positive outlook, Semtech stock closed at 25.17, significantly lower than its all-time high of 94.92 in November 2021.

Gerra’s optimism about Semtech grew following meetings at the Optical Fiber Communication 2024 conference in San Diego. Semtech specializes in high-performance networking and connectivity semiconductor products and systems. The company is poised to benefit from the increased demand for new AI platforms as one of two players qualified for high-density copper interconnect in the market. Additionally, Semtech is well positioned for the implementation of 800G modules in AI architectures and next-generation optical links like linear drive pluggable optics (LPOs).

Describing Semtech as a turnaround success story, Gerra highlighted the company’s new leadership and its emphasis on leveraging strengths in optical networking. The upcoming fiscal fourth-quarter report from Semtech, scheduled for late Thursday, is expected to be a significant catalyst for the stock. IBD Stock Checkup ranks Semtech at No. 17 out of 39 stocks in the fabless semiconductor industry group, with an IBD Composite Rating of 40 out of 99.

Semtech has been transforming itself into a major player in the fabless semiconductor industry by developing innovative solutions that meet customer needs across various industries such as telecommunications, datacenter, automotive and medical devices markets among others. With its new leadership team that includes CEO Mohammad Karamchi who was previously CEO of Analog Devices Inc., it has been focusing on expanding its product portfolio while improving operational efficiency which are key drivers to growth opportunities

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