Lattice Semiconductor’s stock faces a challenging market environment, dropping over 8% last week to $48.73, despite Bank of America raising its price target from $50 to $52 while maintaining an "Underperform" rating. The mixed Q2 2025 results showed revenue of $124 million, a 3% sequential increase but flat year-over-year, with EPS meeting expectations at $0.24. The data center segment emerged as a bright spot, with sales doubling year-over-year in H1 2025, driven by AI server demand. Each data center rack now uses 70–130 of Lattice’s FPGAs, fueling optimism. However, analysts caution that the stock’s 33x 2026 P/E ratio appears inflated, especially as AI accounts for only 20% of data center revenue.
Industrial Recovery Looms as Cash Flow Improves
While industrial and automotive segments struggle with inventory corrections, free cash flow margins surged to 25.2%, enabling $71 million in stock buybacks. CEO Ford Tamer projects Q3 revenue of $128–138 million, targeting 15–20% growth by 2026. Investors remain cautious, weighing robust data center performance against valuation concerns and sluggish industrial recovery.
