Zacks Backs MACOM, Monolithic Power and Semtech as Chip Demand Rises

Key Takeaways

• Zacks Equity Research identified MACOM Technology, Monolithic Power Systems, and Semtech as analog and mixed-signal semiconductor stocks positioned for continued growth.
• AI data centers are increasing demand for power management, optical connectivity, and signal-integrity components, while automotive and industrial markets are recovering.
• Strong earnings revisions support the outlook, although premium valuations, customer concentration, and execution risks leave little room for disappointment.

Zacks Equity Research has highlighted MACOM Technology Solutions, Monolithic Power Systems, and Semtech Corporation as organizations positioned to benefit from improving conditions in analog and mixed-signal semiconductors. The Zacks analog and mixed-signal semiconductor industry, which includes these vendors, carries an Industry Rank of #23, placing it in the top 9% of nearly 250 Zacks-classified industries.

The outlook reflects a broader shift in the semiconductor cycle. Global semiconductor revenue reached $793 billion in 2025, up 21% year over year, according to reporting on Gartner. AI infrastructure and advanced electronics contributed heavily to that expansion. Non-memory semiconductor revenue is expected to rise from $589 billion in 2025 to $718 billion in 2026. Gartner further forecasts worldwide semiconductor revenue to exceed $1.3 to $1.6 trillion by 2026, giving power, connectivity, and signal-processing suppliers a meaningful growth runway beyond the headline memory boom.

The analog integrated circuit segment, which underpins data-center, industrial, automotive, and communications applications, is projected to grow from roughly $54.8 billion in 2021 to approximately $120 billion by 2035. These components translate physical inputs such as temperature, voltage, and radio signals into information digital systems can process. They also regulate power and maintain signal quality. GPUs attract attention, but an AI cluster cannot operate effectively without the supporting circuitry around them.

AI is raising both computing density and power consumption, creating demand for efficient power conversion, high-speed optical links, timing devices, and signal-conditioning products. It also increases overall semiconductor content per system. At the same time, capacity is tightening in selected mature and specialty processes, including 200mm manufacturing platforms commonly used for analog and power products. Constrained supply can support pricing, particularly where products are differentiated and difficult to replace.

MACOM Technology Solutions, based in Lowell, Massachusetts, offers exposure to optical networking, telecommunications, industrial systems, aerospace, and defense. Its portfolio supports 800G and 1.6T connectivity, with emerging opportunities in 3.2T architectures. These technologies align with IEEE 802.3 Ethernet standards as hyperscalers connect larger clusters of processors and switches at higher speeds.

MACOM is also pursuing satellite communications, including applications associated with low-Earth orbit networks. That provides a possible second growth engine, though satellite revenue remains emerging. The nearer-term case rests on AI networking. Zacks data indicates MACOM's third-quarter earnings exceeded the Consensus Estimate by 4.5%, while fiscal 2026 and 2027 estimates also increased over the past 30 days, with 2027 estimates rising 22.7%.

Monolithic Power Systems approaches the AI opportunity from the power-delivery side. The Kirkland, Washington-based company develops power-management and power-conversion products for enterprise data, computing, automotive, communications, and industrial customers. The organization reported second-quarter 2026 revenue and Enterprise Data revenue increases, pointing to rising demand for compact, efficient power systems inside AI servers, though specific revenue growth metrics were not disclosed. Monolithic Power Systems is also developing next-generation architectures such as 800V data-center power.

Growth extends beyond AI to communications, industrial, and automotive sectors. The broader automotive semiconductor market is projected by MarketsandMarkets to grow from $77.42 billion in 2025 to $133.05 billion by 2030, representing an 11.4% CAGR.

Semtech Corporation provides another angle through optical and copper connectivity, analog products, and LoRa wireless technology. The organization reported its latest quarterly data-center revenue rose 91% year over year, compared with 33% growth for the overall business. FiberEdge and CopperEdge products address rising bandwidth and signal-integrity demands, while LoRa supports low-power, long-range industrial and IoT deployments. The company noted its adjusted operating margin expanded to 24.4% in Q2 FY2027 from 18.8% a year earlier.

Valuation remains a shared consideration. The Zacks analog and mixed-signal industry trades at 23.22 times forward earnings, above both the broader market and S&P 500 multiples cited in the research. MACOM Technology Solutions, Monolithic Power Systems, and Semtech Corporation face exposure to hyperscaler spending, product-transition risk, and cyclical demand. While recent estimate revisions suggest momentum is favorable, execution and adapting to market shifts will determine if earnings can grow quickly enough to justify those premiums.