From Radar To AI Data Centers: Why MACOM's Dual Semiconductor Play Is Just Getting Started

MACOM Technology Solutions (MTSI) is executing on dual secular growth drivers: AI-fueled data center optical infrastructure and a global defense electronics upcycle. Q2 FY26 saw Data Center revenue up 36% y/y and Industrial & Defense up 22% y/y, with Q3 revenue guidance of $331–339M, implying 16% sequential growth. Adjusted gross margins are approaching 60% and adjusted EBITDA margins exceed 31%, highlighting significant operating leverage from differentiated compound semiconductor manufacturing. Shares trade at ~50x FY26E adjusted EBITDA, reflecting high expectations and requiring sustained execution; I rate MTSI as Buy, but near-term margin of safety is thin. My Thesis MACOM Technology Solutions (NASDAQ: MTSI ) has been quietly building two of the most durable secular growth exposures in analog semiconductor: AI industrialization fueling the high-speed data center optical infrastructure market and a multi-year resurgence in global defense electronics spending․