The period was almost a “throw a dart blindfolded and hit a successful stock” time for semiconductor businesses.
A general recovery in semiconductor stocks and a positive analyst note was the one-two combination Semtech (SMTC -0.17%) stock needed to have a good week on the market. The company’s share price was almost 19% higher week to date as of early Friday morning, according to data compiled by S&P Global Market Intelligence.
A change in semi sentiment
The mid-summer period was hard on many semiconductor stocks and, by extension, numerous titles in the tech sector generally. Fear started to spread of corporate over-enthusiasm for artificial intelligence (AI), which could lead to a great deal of spending, quickly, on the technology. This negative feeling affected semiconductor stocks too, likely because they would face challenges if demand for AI chips suddenly tanked on resulting pullbacks in spending.
This week, that fearful sentiment seemed to change, with some of the top names associated with AI enjoying rallies. Not least of these were chip companies, with bellwether sector names like onetime highflier Nvidia taking to the skies again.
Adding to this bullish feeling for Semtech specifically was a positive note from an analyst tracking the stock. Before market open on Monday, Piper Sandler‘s Harsh Kumar reiterated his overweight — buy, in other words — recommendation on Semtech, and his $60 per share price target. His new research note was based on fresh conversations with management.
Future plans and potential should lead to growth
In that note, Kumar expressed his feeling that Semtech’s semiconductor business will see significant improvements for the remainder of 2024 into next year. He also wrote that the company’s new management team “is completely committed to the plan of de-levering the balance sheet through divestitures.”
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
