Semtech (SMTC) is rallying 8% today. The company specializes in developing semiconductors and Internet of Things systems.

UBS Is Bullish on SMTC Stock

Swiss bank UBS began coverage of SMTC with an $85 price target, versus the stock's current price of about $75,  and a Buy rating today. UBS is upbeat on the tech company's increased emphasis on AI networking products. SMTC is currently undertaking an internal review which could cause it to further increase its emphasis on AI, according to UBS.

Semtech's CopperEdge equalizer is being utilized in Nvidia's (NVDA) Blackwell chips, UBS noted. Additionally, the company can sell CopperEdge to the large cloud infrastructure companies and AMD (AMD), according to the bank, which believes that the product has a total addressable market of $100 million.

Meanwhile, Semtech can market its FiberEdge amplifier which is used in AI networking to Nvidia and the cloud infrastructure firms as well, according to UBS.

Additional Information About SMTC

Analysts, on average, expect the company's earnings per share to jump to 78 cents this year from 14 cents in 2024.

In the last month, the company's shares have jumped 18%, while they have risen 70% in the last three months and 253% in the last year.

While we acknowledge the potential of SMTC, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SMTC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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