What Makes Semtech Corp. (SMTC) a Key Enabler of AI Data Infrastructure?

Osterweis Capital Management, an investment management firm, released its Q2 2026 investor update for its "Osterweis Opportunity Fund". You can download a copy of the letter here. The fund returned 35.34% in the quarter, significantly outperforming the Russell 2000 Growth Index's 25.71% gain. Robust corporate profits, AI investment, easing oil-shock concerns, strong labor markets, and consumer spending drove the rally. Security selection played a key role in outperformance, especially in Technology, Industrials, Health Care, and Consumer Discretionary. Conversely, smaller sectors like Consumer Staples, Financials, and Real Estate lagged but had minimal impact overall. Looking ahead, while AI is expected to continue influencing economic growth and market performance, a potential consolidation phase for AI-related stocks is anticipated. Please review the Fund's top five holdings to gain insights into its key selections for 2026.

In its second-quarter 2026 investor letter, Osterweis Opportunity Fund highlighted Semtech Corporation (NASDAQ:SMTC). Semtech Corporation (NASDAQ:SMTC) is a semiconductor company that develops and provides analog and mixed-signal chips, Internet of Things systems, and cloud connectivity solutions. On September 22, 2026, Semtech Corporation (NASDAQ:SMTC) closed at $174.33 per share. Over the past month, Semtech Corporation (NASDAQ:SMTC) returned 23.81%, but its shares are up 191.38% over the past year. Semtech Corporation (NASDAQ:SMTC) has a market capitalization of $16.27 billion, and its stock has traded within a 52-week range of $57.50 to $190.64.

Osterweis Opportunity Fund stated the following regarding Semtech Corporation (NASDAQ:SMTC) in its Q2 2026 investor letter:

"Another strong performer in IT was Semtech Corporation (NASDAQ:SMTC), a leading provider of high-performance analog and mixed-signal semiconductors, whose connectivity solutions are increasingly critical to AI data centers. The company reported strong growth in both its data center and LoRa businesses, which is the company's long-range, ultra-low-power wireless platform designed for the Internet of Things. Management guided to 85% growth next quarter and may also divest its non-core Sierra Wireless business, which would boost gross margins. We believe Semtech is well positioned as a critical supplier in the transition to higher-bandwidth AI interconnect infrastructure."

Semtech Corporation (NASDAQ:SMTC) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 84 hedge fund portfolios held Semtech Corporation (NASDAQ:SMTC) at the end of the second quarter, which was 56 in the previous quarter. While we acknowledge the potential of Semtech Corporation (NASDAQ:SMTC) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.