MACOM Technology Solutions (MTSI): Can Data Center and 5G Demand Drive More Upside?

August 20, 2026 - 20:55

Aristotle Capital Boston, LLC has released its investor letter for the Small Cap Equity Fund covering the second quarter of 2026. The fund posted a return of 13.69% for the quarter, which came in below the Russell 2000 Index's gain of 21.49%. According to the fund managers, the shortfall was mainly driven by stock selection within the information technology and industrials sectors, which offset gains made elsewhere in the portfolio.

The letter highlights MACOM Technology Solutions as one of the key holdings under review. The company, which designs and sells analog and mixed-signal semiconductor products, has been a focus for investors looking at the long-term growth of data center infrastructure and the ongoing rollout of 5G networks. The question now is whether those two demand drivers can push the stock to new highs after a period of mixed results.

MACOM has been positioning itself as a supplier of high-performance components for optical networks, radar systems, and defense applications. The data center market, in particular, has become a critical growth area as cloud service providers continue to expand their capacity to handle artificial intelligence and machine learning workloads. These applications require faster data transfer speeds and lower latency, which plays directly into MACOM's product portfolio.

On the 5G side, the company has been working on radio frequency and millimeter wave solutions that are essential for base station equipment. While the initial 5G buildout has been slower than some expected, the long-term outlook remains intact as carriers move toward more advanced network architectures. The fund's commentary suggests that MACOM's exposure to these secular trends could provide a meaningful upside if execution improves and supply chain constraints ease.

However, the letter also notes that the stock has faced headwinds from inventory corrections and uneven order patterns in some end markets. The management team at MACOM has expressed confidence in a recovery during the second half of the year, but the fund is keeping a close watch on near-term earnings reports to confirm that momentum is building. For now, the combination of data center expansion and 5G adoption remains the central thesis for holding the stock.