Semtech's (SMTC) opportunity in the data center space remains a key source for its growth in the near-term, Morgan Stanley analysts said in a Tuesday note.

Analysts said that the company is expected to focus on scaling its critical assets, led by its data centers, now that its balance sheet reset is complete.

Analysts said that a key takeaway from the company's fiscal Q3 financial results was that a major ramp-up for Active Copper Cable is expected in mid-2026 and initial revenue from Linear-drive Pluggable Optics is anticipated in Q4.

For Semtech, the divestiture of non-core assets like Sierra Wireless remains a priority, and management's commentary in its earnings call on this process was "constructive," analysts said.

Morgan Stanley raised the stock's price target to $67 from $64 and retained an equalweight rating.

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