What Happened?
Shares of semiconductor company Semtech (NASDAQ:SMTC) jumped 5.8% in the afternoon session after hedge fund Edgestream Partners L.P. significantly increased its investment in the company. According to a regulatory filing, Edgestream Partners L.P. boosted its holdings in the semiconductor company by a remarkable 496.0% during the first quarter. The firm acquired an additional 54,185 shares, bringing its total stake to 65,110 shares, valued at approximately $2.24 million. Such a substantial purchase by an institutional investor was often interpreted by the market as a strong vote of confidence in a company's future prospects and strategy.
Is now the time to buy Semtech? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Semtech’s shares are extremely volatile and have had 58 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 2 days ago when the stock dropped 3.2% on the news that a cautious outlook from semiconductor equipment giant ASML sparked a broad sell-off across the sector, hitting chipmakers and equipment suppliers alike.
The negative sentiment was triggered after the Dutch firm, whose complex machines are essential for producing advanced chips, warned it could no longer guarantee growth in 2026. ASML's management cited "increasing uncertainty driven by macro-economic and geopolitical developments," including the potential for new U.S. tariffs.
As an industry bellwether, a company whose performance is seen as an indicator of the entire sector's health, ASML's comments are a key signal of future capital spending. The warning sent a chill through the market, as concerns grow that trade tensions could disrupt the highly globalized semiconductor supply chain and slow down investment from chip manufacturers.
Semtech is down 13.5% since the beginning of the year, and at $53.72 per share, it is trading 30.4% 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 $1,002.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.