BMO Capital Markets upgraded Macom Technology Solutions (MTSI) to Outperform from Market Perform with a $335 price target, implying 27 percent upside from current levels.
Analyst Harsh Kumar argues valuations have reset to attractive levels. Forward multiples compressed to 29x from the high-50s in June, while fundamentals remain intact. The stock has fallen 30 percent over three months during semiconductor sector weakness and macroeconomic concerns, now trading more than 30 percent below its May peak of $418.90.
The core upside case rests on datacenter. Hyperscalers, cloud providers and AI labs are aggressively funding compute and networking infrastructure. Macom's datacenter revenue is projected to grow 70 percent in fiscal 2026, accelerating from 47 percent growth in the prior year. Kumar sees this segment as the primary growth driver.
Defense provides a secondary catalyst. Expansions in space programs are expected to become a material contributor next year. A recovery in the broader industrial market should add further upside.
Macom designs high-performance analog and radio frequency semiconductors for data centers, telecommunications, industrial and defense applications.
BMO's rating reflects broader Wall Street conviction. Of 18 analysts covering the stock, 13 have buy or strong buy ratings; five maintain hold.
