MACOM Technology Solutions Holdings, Inc. (NASDAQ: MTSI) reported a robust start to fiscal year 2026 on Thursday, delivering first-quarter results that surpassed Wall Street’s expectations for both revenue and earnings. Despite the “double-beat” and a strong outlook, shares experienced a modest pullback as investors weighed the company’s premium valuation against its accelerating growth in the artificial intelligence (AI) and data center sectors.
Q1 2026 Financial Scorecard
MACOM’s fiscal first quarter ended Jan. 2, 2026 was characterized by significant year-over-year momentum, particularly in high-speed optical connectivity.
| Metric | Q1 2026 Actual | Consensus Estimate | YoY Change |
| Revenue | $271.6 Million | $269.0 Million | +24.5% |
| Adjusted EPS | $1.02 | $0.99 | +29.1% |
| Adjusted Gross Margin | 57.6% | 57.0% | +10 bps |
| Operating Margin | 27.2% | 25.5% | +170 bps |
Data Center and AI: The Growth Engine
The standout performer for the quarter was the Data Center segment. Management noted that demand for PCIe and CXL optical connectivity solutions is accelerating as hyperscale customers build out AI-driven cloud infrastructure.
The AI Tailwind: MACOM is seeing a surge in demand for its Gallium Nitride (GaN) RF components and high-speed optical transceivers, which are critical for the low-latency, high-bandwidth requirements of AI clusters.
Wolfspeed RF Integration: The integration of the recently acquired Wolfspeed RF business is proceeding ahead of schedule, contributing to the favorable product mix and margin expansion.
Industrial & Defense Resilience
While other chipmakers have faced volatility in industrial sectors, MACOM reported record performance in its Industrial & Defense (I&D) segment.
Strategic Backlog: The company maintained a strong book-to-bill ratio, supported by multi-year defense contracts and satellite communications (LEO) programs.
Telecommunications Stabilization: Management signaled that the “inventory digestion” phase in the 5G and broadband markets is finally easing, leading to a stabilization in telecom revenues.
Margin Expansion and Guidance Surprise
MACOM provided an optimistic outlook for the second quarter, suggesting that the current growth trajectory is sustainable.
Q2 2026 Guidance: The company expects revenue between $281 million and $289 million, well above the consensus of $275.7 million. Adjusted EPS is guided to $1.05 – $1.09.
Targeting 60%: CEO Stephen Daly reiterated the company’s long-term goal of reaching a 60% gross margin by optimizing its Lowell, Mass., fabrication facility and scaling higher-margin proprietary products like its 140nm GaN process.
Con Call Highlights: Management Commentary
During the conference call, CEO Stephen G. Daly emphasized the company’s focus on “differentiated solutions” rather than commodity semiconductors.
Stephen G. Daly, President and CEO said, “We are executing on our strategic plan to provide unique, high-performance technology to the markets that need it most. Our record revenue this quarter reflects the increasing relevance of our optical and RF portfolios in the global AI infrastructure build-out.”
Key Takeaways from the Q&A:
Energy Efficiency: Investors were particularly interested in MACOM’s role in reducing the power consumption of data centers via its low-power optical designs.
China Exposure: Management confirmed that while China remains a strategic market accounting for roughly 23% of revenue, growth is currently being driven more heavily by North American and European hyperscale demand.
Investor Outlook: Valuation vs. Velocity
Despite the stellar report, MTSI shares fell approximately 3% in post-earnings trading. Market analysts suggest this is a “digestion phase” for the stock, which has rallied over 70% in the past year. With the stock trading at a forward P/E of approximately 53x, the bar for “surprises” remains high. However, the $240 million backlog and the expansion into the Siri-Gemini and broader AI ecosystems position MACOM as a premier infrastructure play for 2026.
