MACOM Technology Solutions: Why I Loaded Up This Pullback

Yiannis Zourmpanos 17.67K Followers Follow Summary MACOM’s Q3 revenue increased 35.8% while adjusted operating income surged nearly 70%, demonstrating powerful operating leverage. Record 1.6x book-to-bill and 35% sequential Data Center guidance suggest demand continues accelerating despite the larger revenue base. Data Center growth could reach roughly 50% in FY2027 as 1.6T, photodetectors, NPO and eventually CW lasers expand content. Gross margin reached 59.7%, while management targets approximately 37% Q4 operating margin and more than 40% during FY2027. At 36.6x FY2027 earnings, valuation demands execution, but accelerating estimates and margin expansion could support substantial additional upside. Yori Meirizan/iStock via Getty Images Investment Thesis Following Q3 FY2026 earnings, I see MACOM Technology Solutions ( MTSI ) as one of the most interesting AI infrastructure plays. While 36% revenue growth was very good, the real news is happening beneath the surface, as This article was written by Yiannis Zourmpanos 17.67K Followers Follow Hi, I'm Yiannis. Spotting winners before they break out is what I do best.Experience: Previously worked at Deloitte and KPMG in external/internal auditing and consulting. Education: Chartered Certified Accountant, Fellow Member of ACCA Global, with BSc and MSc degrees from U.K. business schools. Investment Style: Spotting high-potential winners before they break out, focusing on asymmetric opportunities (with at least upside potential of 3-5X outweighing the downside risk). By leveraging market inefficiencies and contrarian insights, we seek to maximize long-term compounding while protecting against capital impairment.Risk management is paramount—we seek a strong margin of safety to protect against capital impairment while maximizing long-term compounding. Our 2-3 year investment horizon allows us to ride out volatility, ensuring that patience, discipline, and intelligent capital allocation drive outsized returns over time. Analyst’s Disclosure: I/we have a beneficial long position in the shares of MTSI either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.