Semtech Corporation Posts Record $341.9mn Quarter, Shares Up 5.5%
Semtech Corporation posted record Q2 FY2027 revenue of $341.9mn and shares gained 5.5%, but negative trailing EPS and a 32.7x forward multiple leave bulls dependent on Q3 gross margin expansion to jus
Semtech Corporation Posts Record $341.9mn Quarter, Shares Up 5.5%
NEW YORK, August 26 —
Semtech Corporation (SMTC) posted record quarterly revenue of $341.9mn in Q2 FY2027, with shares jumping 5.5% on the day.
- Q2 FY2027 revenue $341.9mn, a record; TTM revenue $1.1bn, up 15.9% YoY
- Forward P/E of 32.7x against trailing EPS of -$0.43; GF Score 73/100, GuruFocus flagging overvalued at current levels
- Next data point: Q3 FY2027 guidance and gross margin trajectory from the earnings call presentation
$133mn FCF Is Doing the Work That Trailing EPS Cannot
The headline tension is straightforward: SMTC trades at 32.7x forward earnings while trailing EPS sits at -$0.43. Bulls are not buying earnings. They are buying $133mn in free cash flow and a revenue line growing 15.9% YoY on a $1.1bn TTM base.
When FCF is positive and GAAP EPS is negative, non-cash charges are the gap. The forward multiple prices in the expectation that those charges thin out as the data center and IoT cycles deepen. That is the one angle the wire story misses: this is a cash-flow bet dressed up as a growth story.
If that thesis holds, the 5.5% pop is the opening move on a re-rate. If Q3 guidance underwhelms, the math unravels fast.
Algert Global Sells Into the Pop While Analysts Call It a Buy
The split screen on August 26 is instructive. Analyst upgrades citing deepening data center and IoT exposure hit the tape the same day Algert Global LLC disclosed a reduction in SMTC holdings.
Institutions trimming after a record quarter is not panic; rebalancing after a single-day move that size is routine. What makes the timing notable is the context: GuruFocus assigns a GF Score of 73/100 and explicitly flags SMTC as overvalued at current levels.
The upgrades are directional calls on the business cycle. The selling is a valuation call. Both can be correct, but they are not compatible at the same price.
Gross Margin Compression in Q3 Would Break the 32.7x Multiple
At $127.52 per share, SMTC's valuation is almost entirely a bet on margin expansion. Revenue growth of 15.9% YoY is already in the stock; what is not priced in is the path from -$0.43 trailing EPS to a figure that justifies a premium-growth multiple.
Gross margin trajectory from the Q2 earnings call presentation is the single most important input heading into Q3. Any sequential compression is the falsifying signal. A step-up, by contrast, reframes that gain as the market finally pricing a business that has turned the corner. Use the DCF calculator to stress-test what margin assumptions the current price actually embeds.
A full Basis Report analysis with a BUY rating is available in the complete SMTC report, with live metrics tracked on the SMTC stock page.
Basis Report is independent research for informational purposes. It is not investment advice and not a recommendation to buy or sell any security.
Semtech Corporation reported Q2 FY2027 earnings results on 2026-08-26, with shares rising 5.5% on the day.