Semtech Stock Sinks After Nvidia Configuration Change
By Dean Seal
Shares of Semtech are on track for their worst day in decades after a change at Nvidia that prompted the company to reduce its guidance.
The stock dropped 31% to $37.67 in the morning trading session, putting it on pace for its biggest single-day decrease since 1986.
The chipmaker said after the bell on Friday that it expects sales of its CopperEdge products, used in active copper cables, to be lower than the $50 million floor it previously targeted for fiscal 2026 based on feedback from a major customer.
Benchmark analyst Cody Acree said that customer is Nvidia, which is likely pulling back support for a server rack configuration that used Semtech’s cable products. Nvidia is coming out with a new processing unit and may be making the change to address heating issues, he said.
Acree said in a research note:
We believe this decision was made as Nvidia needed to prioritize its resources to ensure a smooth generational transition to a system that we have heard has been struggling with overheating issues,
While this reduces the total addressable market for Semtech’s active copper cable-based designs, Nvidia is still ramping its current GPU with servers that use the active copper cables, he said. And Meta Platforms continues to use the configuration that requires the cables, the analyst said. He maintains a buy rating on the stock.
Acree said on Friday:
While today’s announcement is disappointing, we don’t believe it is as devastating to the company’s business as initially indicated in the soft after-market trading,
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Semtech Stock Sinks After Nvidia Configuration Change, source
