MACOM Technology Solutions Holdings, Inc. (MTSI): A Bull Case Theory

 We came across a bullish thesis on MACOM Technology Solutions Holdings, Inc. on Make Money, Make Time’s Substack by Oliver | MMMT Wealth. In this article, we will summarize the bulls’ thesis on MTSI. MACOM Technology Solutions Holdings, Inc.’s share was trading at $175.69 as of December 16th. MTSI’s trailing and forward P/E were 106.64 and 42.37 respectively according to Yahoo Finance.

MACOM Technology Solutions Holdings, Inc., together with its subsidiaries, provides analog semiconductor solutions for use in wireless and wireline applications across the radio frequency (RF), microwave, millimeter wave, and lightwave spectrum.  MTSI is positioned as a key enabler of next-generation optical connectivity through its leadership in Linear Drive Pluggable Optics (LPO), a technology that challenges the traditional dominance of DSP-based optical solutions.

The company’s core thesis rests on the idea that DSP chips, such as those supplied by Marvell, are not always necessary for high-performance optical links. By leveraging linear drive architectures, MTSI claims it can amplify signals sufficiently without DSPs, resulting in materially lower costs and significantly reduced power consumption.

This positions LPO as an attractive intermediate solution between today’s conventional pluggable optics and the longer-term vision of co-packaged optics (CPO), allowing hyperscalers and data center operators to improve efficiency without waiting for full CPO adoption. As AI-driven data center traffic accelerates, the need for power-efficient, scalable optical interconnects strengthens MTSI’s relevance within the optical ecosystem.

Financially, the company is expected to deliver solid top-line and outsized profitability growth, with revenue projected to grow 15.9% in FY26 and EBITDA expected to expand at a faster 32.0% pace, reflecting operating leverage and the higher-margin nature of its product mix. Net income margins are already strong at 27.2%, underscoring the profitability of its differentiated technology. However, this growth and margin profile is reflected in a demanding valuation, with the stock trading at 12.3x next-twelve-month EV/Sales, 37.9x EV/EBITDA, and 45.0x forward P/E.

The investment case therefore, hinges on MTSI’s ability to scale LPO adoption as a credible, near-term alternative to DSP-heavy optics, capturing share as customers prioritize power efficiency and cost. If LPO gains broader acceptance, MTSI’s growth and margin trajectory could justify its premium valuation, while execution missteps or slower adoption would pose downside risk given elevated multiples.

Previously, we covered a bullish thesis on Broadcom Inc. (AVGO) by Daan Rijnberk in March 2025, which highlighted the company’s AI-driven revenue growth, hyperscaler customer integration, record profitability, and strong free cash flow generation. The company’s stock price has appreciated approximately by 74.54% since our coverage. The thesis still stands as Broadcom maintains its AI infrastructure leadership. Oliver | MMMT Wealth shares a similar focus but emphasizes MTSI’s Linear Drive Pluggable Optics as a lower-cost, power-efficient alternative to DSP-heavy solutions.

MACOM Technology Solutions Holdings, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 35 hedge fund portfolios held MTSI at the end of the third quarter which was 34 in the previous quarter. While we acknowledge the risk and potential of MTSI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MTSI and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.