Semtech Corp (NASDAQ:SMTC), a leading provider of highperformance semiconductor, Internet of Things (“IoT”) systems and cloud connectivity service solutions, stock rallies 17.25% (As on August 26, 11:26:09 AM UTC-4, Source: Google Finance) after the company reported second-quarter earnings that edged past Wall Street estimates and issued guidance which was largely in line with expectations. Semtech’s adjusted gross margin improved to 53.2% from 50.4% a year ago, while adjusted operating margin rose to 18.8% from 14.2% in the prior-year period. The company also reported stronger cash flow, with $44.4 million provided by operating activities compared to a $5 million outflow in the second quarter of fiscal 2025. The non-GAAP operating income was $48.6 million with adjusted EBITDA of $56.5 million.

Moreover, the Infrastructure end market was a standout performer, with net sales of $73.4 million representing a 39% increase year-over-year, though just a modest 1% sequential growth. Within this segment, data center sales reached a record $52.2 million, surging 92% compared to the same period last year. In the High-End Consumer end market, Semtech reported net sales of $41.2 million, growing 16% sequentially and 11% year-over-year. Consumer TVS (Transient Voltage Suppression) products were particularly strong at $29.9 million, up 22% quarter-over-quarter and 15% year-over-year, outpacing overall handset volume growth in the market. The Industrial end market, Semtech’s largest by revenue, generated $143.0 million in net sales, flat sequentially but up 14% year-over-year. Within this segment, LoRa-enabled solutions contributed $36.9 million (down 5% sequentially but up 29% year-over-year), while IoT systems hardware delivered $64.8 million (up 2% sequentially and 24% year-over-year).

SMTC in the second quarter of FY26 has reported the adjusted earnings per share of 41 cents, beating the analysts’ estimates for the adjusted earnings per share of 40 cents. The company had reported the adjusted revenue growth of 20 percent to $257.6 million in the second quarter of FY26, beating the analysts’ estimates for revenue of $256.1 million. For the Consumer segment, Semtech is expanding the deployment of its PerSe sensing technology across multiple applications, while in the Industrial segment, the company continues to extend LoRa technology’s reach across markets with dual-band capability to facilitate adoption.

For the third quarter of fiscal 2026, Semtech forecasts revenue between $261 million and $271 million, with the midpoint of $266 million aligning with the analyst consensus of $265 million. The company expects adjusted earnings per share of $0.41 to $0.47, with the midpoint of $0.44 matching analyst expectations. By segment, management expects sequential growth in the Infrastructure end market, slight increases in both High-End Consumer and Industrial segments, with LoRa sales projected to remain flat.