What Happened?
Shares of semiconductor company Semtech (NASDAQ:SMTC) jumped 9.7% in the afternoon session after chip stocks rallied to start the week as investor optimism rose following trade discussions between U.S. and Chinese officials in London.
Semiconductor companies have been among the hardest hit by the dispute, with key technologies subject to export controls. These restrictions have disrupted supply chains, creating uncertainty for both revenue growth and long-term planning.
Following the talks, investor sentiment rebounded on expectations that some of these constraints may soon be lifted. U.S. National Economic Council Director Kevin Hassett reinforced this outlook, "Our expectation is that ... immediately after the handshake, any export controls from the U.S. will be eased, and the rare earths will be released in volume, and then we can go back to negotiating smaller matters.".
The shares closed the day at $41.39, up 9.4% from previous close.
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What The Market Is Telling Us
Semtech’s shares are extremely volatile and have had 55 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 12 days ago when the stock dropped 6.8% on the news that the company reported underwhelming first quarter 2025 results: revenue was just in line this quarter, and revenue guidance for next quarter missed.
On the other hand, Semtech reported a big improvement in inventory levels. Its adjusted operating income outperformed Wall Street's estimates. Still, this print was a mixed yet weaker quarter.
Semtech is down 34.4% since the beginning of the year, and at $40.72 per share, it is trading 47.2% below its 52-week high of $77.15 from January 2025. Investors who bought $1,000 worth of Semtech’s shares 5 years ago would now be looking at an investment worth $754.91.
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