Semtech Corporation reported record data center revenues of $100 million in Q2 FY2027, up 91% year-over-year, driven by strong demand for 800G products and the ramp of 1.6T CopperEdge and FiberEdge solutions. The company expects continued momentum with 45% sequential growth projected for Q3, while gaining significant market share in optical connectivity. However, SMTC trades at a premium valuation with a forward P/S ratio of 9.82 versus the industry average of 8.42.

Zacks highlights four liquid stocks with strong financial positions and growth potential: Commerce.com, a B2C/B2B commerce platform launching AI-ready product solutions; Motorsport Games, benefiting from Le Mans Ultimate success and RaceControl subscription growth; Semtech, capitalizing on data-center AI demand with strong semiconductor sales; and Telos, expanding through federal government contracts and cybersecurity solutions.

On October 12, 2026, the Dow Jones rose 0.38% while the S&P 500 and Nasdaq declined as investors rotated into value sectors away from technology. Memory chip stocks and semiconductor names faced pressure amid valuation concerns, while Meta Platforms gained on its new AI model launch and Figs surged over 12%. Bank earnings and inflation data are expected this week.

A stock screening analysis identified four companies—Commerce.com (CMRC), Motorsport Games (MSGM), Semtech (SMTC), and Telos (TLS)—that meet strict criteria for liquidity, asset efficiency, and growth potential. These stocks were selected from over 7,700 candidates based on balanced liquidity ratios, above-average asset utilization, Strong Buy ratings, and solid growth scores.

Wall Street faces a complex landscape in Q4 2026 with strong year-to-date gains offset by rising Treasury yields and inflation concerns. The article recommends focusing on three sectors with solid earnings fundamentals: semiconductors benefiting from AI infrastructure demand, energy companies with disciplined capital spending amid oil-price volatility, and utilities investing in electricity infrastructure for data centers and grid modernization.

AI infrastructure spending and quantum computing's commercial traction are creating investment opportunities in Q3 earnings season. Semtech expects 160% year-over-year data-center sales growth, while D-Wave Quantum's bookings surged 1,120%. However, higher interest rates and inflation concerns pose risks to growth-stock valuations.

Zacks Investment Research identifies five growth stocks with Zacks Rank #1 (Strong Buy) ratings expected to perform well in Q4 2026, supported by softer inflation, lower bond yields, and reduced crude oil prices. The picks include Quanta Services (infrastructure/AI data centers), FormFactor (semiconductor testing), Semtech (data center networking), Centene (healthcare services), and Roku (streaming advertising), all showing strong revenue and earnings growth projections.

AXT, Inc. reported record Q2 2026 InP revenues of $30.7M and total revenues of $47.6M, driven by accelerating demand for indium phosphide substrates in AI data centers and optical connectivity. The company has an InP backlog exceeding $100M, is doubling 2026 capacity, and has secured multi-year customer agreements. However, China export permit requirements pose a potential risk to shipments and revenue recognition.

The article explains how investors can use the Zacks Earnings ESP (Expected Surprise Prediction) tool to identify stocks likely to beat earnings expectations. The ESP model compares analyst revisions to consensus estimates, and when combined with a Zacks Rank of #3 or higher, stocks posted positive surprises 70% of the time with average annual returns of 28%. Two example stocks highlighted are Alphabet and Semtech, both showing positive ESP figures ahead of their upcoming earnings reports.

ON Semiconductor shares rallied 6% to $84.89, driven by strong AI data center demand and automotive content gains. The company is expected to report quarterly earnings of $0.87 per share (+38.1% YoY) and revenues of $1.7 billion (+9.7% YoY). However, consensus EPS estimates have been revised 0.7% lower over the past 30 days, which typically doesn't support sustained price appreciation. The stock carries a Zacks Rank #3 (Hold).

Semtech Corporation (SMTC) has been added to the Zacks Rank #1 (Strong Buy) list on August 29, 2026. Six analysts revised earnings estimates upward in the last 60 days, with consensus estimates increasing to $3.48 per share. The semiconductor company is forecasted to see 103.5% earnings growth and 41.5% sales increase for the current fiscal year, with an average earnings surprise of 9.8%. SMTC has gained 37.8% over the past four weeks.

A stock screening analysis identified four companies—Etsy, monday.com, Semtech, and Workiva—that combine strong liquidity with efficient asset utilization and solid growth prospects. These stocks were selected from over 7,700 candidates based on criteria including liquidity ratios between 1-3, above-average asset utilization, Zacks Rank #1 (Strong Buy) ratings, and Growth Scores of A or B.