Why Semtech Corp. (SMTC) Crashed Last Week

We recently compiled a list of the These 10 Firms Were Last Week’s Worst Performers. In this article, we are going to take a look at where Semtech Corp. (NASDAQ:SMTC) stands against the other stocks.

Volatile trading persisted on the stock market last week as investors scrambled to react to a flurry of positive and negative news that sparked both buying and selling positions.

On Friday alone, all Wall Street main indices fell into the red territory, with trading dampened mainly by tariff threats and expectations of a higher inflation rate in the US.

Ten companies under mixed sectors also mirrored the decline, with each booking double-digit slumps. This article details which 10 companies suffered the most last week and what specifically caused investor pessimism.

To come up with last week’s worst performers, we considered only the stocks with at least $2 billion in market capitalization and $5 million in daily trading volume.

A technician looking at a circuit board of analog semiconductor products.

Semtech Corp. (NASDAQ:SMTC)

Semtech Corp. shares retreated by 18.6 percent last week from the $66.96 finish on January 31 to end Friday’s trading at $54.51 apiece following a stock rating downgrade from an analyst, citing slower take-up in the chipmaker’s products.

Shares of the company were trading around the $60 level most of the week before losing momentum after Baird analysts markedly lowered their price target for SMTC to $60 from $80 previously while maintaining an “outperform” rating on the stock.

The analysts cited slower-than-expected take-up in SMTC’s active copper cables (ACC), which offer extended reach to allow for high-volume switch-to-server connections.

The brokerage firm also noted that it observed muted activity in overall ACC take-up.

“ACC benchmarking activity has been muted in the past few months outside of Meta. ACCs and LPOs remain a medium-term opportunity for Semtech and are the basis for our Outperform rating; however, investors should brace for near-term turbulence,” Baird said in its note.

Overall SMTC ranks 7th on our list of last week’s worst performers. While we acknowledge the potential of SMTC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as SMTC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.

Disclosure: None. This article is originally published at Insider Monkey.