Market Overview - U.S. stock markets have experienced a significant bull run in 2023, with the Dow, S&P 500, and Nasdaq Composite increasing by 9.1%, 12.5%, and 15.5% respectively, while the S&P 400 index is up 2.2% year to date [1] Mid-Cap Stocks - Investment in mid-cap stocks is recognized as a strong portfolio diversification strategy, combining attributes of both small and large-cap stocks, with high potential for profitability and market share growth [2] - Mid-cap stocks are less susceptible to losses compared to large-cap stocks during economic slowdowns due to lower international exposure, and they can outperform small caps in a thriving economy due to established management and access to capital [3] Recommended Mid-Cap Technology Stocks - Five mid-cap technology stocks with favorable Zacks Rank and short-term price upside potential are Lyft Inc. (LYFT), GitLab Inc. (GTLB), EPAM Systems Inc. (EPAM), Onto Innovation Inc. (ONTO), and Semtech Corp. (SMTC), all carrying a Zacks Rank 2 (Buy) [4][8] Lyft Inc. (LYFT) - Lyft operates a ridesharing marketplace in the U.S. and Canada, benefiting from strong rider and driver growth, and aims to enter the robotaxi market through strategic partnerships [5][6] - Expected revenue and earnings growth rates for LYFT are 14.6% and 25.9% respectively for next year, with a short-term average price target indicating an 18.6% increase from the last closing price of $19.78, suggesting a maximum upside of 61.8% [9] GitLab Inc. (GTLB) - GitLab offers a DevOps platform that enhances software development efficiency, with strong enterprise demand for its AI-native solutions driving growth [10][11] - Expected revenue and earnings growth rates for GTLB are 19.7% and 16.7% respectively for next year, with a short-term average price target suggesting a 38.8% increase from the last closing price of $41.49, indicating a maximum upside of 73.5% [12] EPAM Systems Inc. (EPAM) - EPAM is benefiting from digital transformation trends and strategic acquisitions, with a focus on Gen AI capabilities expected to boost growth [13][14] - Expected revenue and earnings growth rates for EPAM are 6.9% and 9.9% respectively for next year, with a short-term average price target indicating a 15.7% increase from the last closing price of $180.98, suggesting a maximum upside of 40.9% [15] Onto Innovation Inc. (ONTO) - Onto Innovation is leveraging its diversified portfolio and AI-driven advanced packaging, with strong sales growth expected in the fourth quarter [16][17] - Expected revenue and earnings growth rates for ONTO are 14.8% and 19.9% respectively for next year, with a short-term average price target suggesting a 23.4% increase from the last closing price of $127.18, indicating a maximum upside of 41.5% [18] Semtech Corp. (SMTC) - Semtech is experiencing strong demand in industrial and datacenter markets, particularly for its connectivity solutions [19][20] - Expected revenue and earnings growth rates for SMTC are 10.1% and 24.5% respectively for next year, with a short-term average price target indicating a 15.3% increase from the last closing price of $63.85, suggesting a maximum upside of 41% [21]

Core Insights - Semtech Corporation (SMTC) is set to report its second-quarter fiscal 2025 results on August 25, with anticipated revenues of $256 million, reflecting an 18.9% increase year-over-year [1][10] Revenue and Earnings Expectations - For the fiscal second quarter, Semtech expects non-GAAP earnings per share to be 40 cents, showing a significant improvement from 11 cents in the same quarter last year [2][10] Performance Drivers - The anticipated strong performance is attributed to growth in infrastructure and high-end consumer markets, as well as robust demand in the wireless sector driven by 5G offerings [3][10] - The launch of cost-optimized 5G solutions, including EM9492 and EM9295 modules, is expected to enhance adoption among telecom carriers [3] - Increased compliance with various certifications for 5G modules is likely to boost their acceptance among global networking carriers [3] - Strong momentum in Signal Integrity and Analog Mixed Signal & Wireless product lines is expected to contribute positively [4] - Demand for Tri-Edge and FiberEdge products in hyperscale data centers is anticipated to aid performance [5] - The growing popularity of LoRa devices and LoRaWAN standards is expected to positively impact top-line growth [6] Challenges - Macroeconomic factors such as prolonged inflation and high interest rates may pose challenges for Semtech in the fiscal second quarter [7] - Tensions between the United States and China could raise concerns, while softness in the industrial end-market and Connectivity segment is expected to negatively affect results [7]

Core Viewpoint - Semtech Corporation (SMTC) is expected to report strong financial results for the first quarter of fiscal 2026, with significant year-over-year growth in both net sales and earnings per share. Financial Performance - Semtech anticipates net sales of $250 million (+/- $5 million), reflecting a 21% year-over-year growth, with the Zacks Consensus Estimate for revenues at $249.79 million, indicating a rise of 21.20% from the previous year [1][2] - The company expects non-GAAP earnings per share to be 37 cents (+/- 3 cents), while the consensus mark is at 38 cents, showing a robust year-over-year improvement of 533% [2] Market Drivers - The fiscal first-quarter performance is likely to benefit from strength in infrastructure and high-end consumer markets, with strong growth in the wireless end-market attributed to increasing 5G offerings [3] - Continued growth in FiberEdge and Tri-Edge products, especially for 400G/800G modules, is expected to boost revenue [3] - Strong momentum in Signal Integrity and Analog Mixed Signal & Wireless product lines is anticipated to contribute positively, alongside the growing adoption of artificial intelligence [4] - Increased demand for LoRa devices and LoRaWAN standards is expected to positively impact top-line growth, particularly with new product offerings targeting smaller-scale network deployments [5] Challenges - Macroeconomic challenges, including prolonged inflation and high interest rates, may pose difficulties for the company [6] - Delayed adoption of CopperEdge products due to architectural changes in server racks could negatively affect results [6] - Escalating tensions between the United States and China, along with softness in the industrial end-market and Connectivity segment, are expected to be significant negatives [7]

Group 1: Market Overview - The S&P 500 Index is down approximately 14% from its 52-week high, while the Invesco PHLX Semiconductor ETF is down around 35% from its highs [1] - Lesser-known chip stocks Semtech and Onsemi have experienced declines of more than 50% from their 52-week highs, presenting potential long-term growth opportunities [2] Group 2: Semtech Analysis - Semtech's stock has dropped 69% from its 52-week high, despite a significant improvement in its financial position [2] - In the most recent quarter, Semtech's revenue rose 30% year-over-year, with adjusted operating margin nearly doubling to nearly 20% [3] - The infrastructure segment, which includes data center customers, saw a 75% year-over-year growth [3] - Semtech's LoRa devices in the Industrial market experienced a revenue increase of 205% from the prior year quarter, indicating strong customer resonance [4] - The current price target for Semtech is $57.33, suggesting a potential upside of 112.42% [6] - Morgan Stanley analysts have set a price target of $30 for Semtech, indicating a 22% upside over the next 12 months [7] Group 3: Onsemi Analysis - Onsemi's stock is down nearly 56% from its 52-week high, primarily due to negative revenue growth for six consecutive quarters [8] - Despite the downturn, Onsemi maintains strong profitability with an adjusted gross profit margin of around 45% and an adjusted operating margin of more than 25% [9] - The company targets revenue growth of 10% to 12% through 2027 and aims for a 40% operating margin [10] - Onsemi is well-positioned to benefit from megatrends such as increasing electric vehicle ownership and has a strong focus on silicon carbide (SiC)-based chips [10][11] - The 12-month stock price forecast for Onsemi is $63.52, indicating a potential upside of 73.08% [12] - Analysts remain cautiously optimistic about Onsemi, with a mix of Buy and Hold ratings [13]