What Happened?
Shares of semiconductor designer Lattice Semiconductor (NASDAQ: LSCC) fell 9.5% in the morning session after the company reported third-quarter results with the pullback following a significant run-up in the previous months.
Mostly, it was a very in-line quarter with revenue, EPS, and guidance for next quarter all meeting Wall Street's expectations. Management attributed the quarter’s performance to accelerating demand in communications and computing, especially from data center and AI infrastructure customers. CEO Ford Tamer highlighted expanding design wins in low-power field-programmable gate arrays (FPGAs) for data center, security, and board management applications, while noting that normalization of channel inventory in industrial and automotive markets remained a drag.
Looking forward, Lattice Semiconductor’s guidance reflected optimism driven by robust bookings in data center and communications, anticipated inventory normalization, and increasing adoption of its Nexus and Avant FPGA product lines. Management expects significant revenue acceleration in 2026, with Tamer stating, “Our comms and compute business revenue growth continues to accelerate, and it will accelerate further into 2026.” With the stock up nearly 50% in the last three months, this wasn't enough.
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What Is The Market Telling Us
Lattice Semiconductor’s shares are very volatile and have had 23 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 13 days ago when the stock dropped 4.9% on the news that new trade tensions and disappointing earnings from major tech companies weighed heavily on investor sentiment.
A key driver was the news that the White House is considering new restrictions on Chinese exports that use U.S. software, a move that could significantly impact technology companies. This uncertainty over escalating trade tensions created a broad sense of worry in the market. Simultaneously, shares of the semiconductor giant Texas Instruments dropped 6% after its latest earnings and future revenue forecast both came in weaker than expected, which is a big concern for the health of the tech industry. This poor performance from Texas Instruments immediately dragged down the entire semiconductor sector, causing other major chipmakers like Advanced Micro Devices and Micron Technology to also see significant declines. Compounding the bad news, streaming service Netflix saw its stock slump 9% after it missed its earnings targets, partly blaming a tax dispute in Brazil. The combined effect of renewed trade war fears and the direct evidence of underperformance from influential companies in the technology sector was enough to push the major market indexes lower.
Lattice Semiconductor is up 19.3% since the beginning of the year, but at $66.73 per share, it is still trading 10.7% below its 52-week high of $74.71 from September 2025. Investors who bought $1,000 worth of Lattice Semiconductor’s shares 5 years ago would now be looking at an investment worth $1,741.
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