What Happened?
Shares of semiconductor designer Lattice Semiconductor (NASDAQ:LSCC) jumped 5.3% in the afternoon session after chip stocks rallied to start the week as investor optimism rose following trade discussions between U.S. and Chinese officials in London.
Semiconductor companies have been among the hardest hit by the dispute, with key technologies subject to export controls. These restrictions have disrupted supply chains, creating uncertainty for both revenue growth and long-term planning.
Following the talks, investor sentiment rebounded on expectations that some of these constraints may soon be lifted. U.S. National Economic Council Director Kevin Hassett reinforced this outlook, "Our expectation is that ... immediately after the handshake, any export controls from the U.S. will be eased, and the rare earths will be released in volume, and then we can go back to negotiating smaller matters.".
The shares closed the day at $50.05, up 4.2% from previous close.
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What The Market Is Telling Us
Lattice Semiconductor’s shares are extremely volatile and have had 31 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 biggest move we wrote about over the last year was 10 months ago when the stock dropped 18.1% on the news that the company reported weak second-quarter earnings. Its revenue and EPS both missed Wall Street's estimates.
Looking ahead, guidance for next quarter's revenue also missed analysts' expectations. The company called out industry headwinds, adding, "Second quarter 2024 results reflect the impact of cyclic industry headwinds. While the industry continues to go through a period of inventory normalization, we are starting to see signs of improvement. We continue to execute on our ongoing product portfolio expansion and remain well positioned for long-term growth."
Overall, this was a mediocre quarter for Lattice Semiconductor. Following the results, Bank of America analyst downgraded the stock's rating from Neutral to Underperform, citing "slowing growth prospects and muted visibility."
Lattice Semiconductor is down 10.5% since the beginning of the year, and at $50.08 per share, it is trading 27.2% below its 52-week high of $68.78 from February 2025. Investors who bought $1,000 worth of Lattice Semiconductor’s shares 5 years ago would now be looking at an investment worth $1,794.
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