Trading Analysis Report: ALGM
- Analysis date: 2026-06-01
- Processed decision: Buy
- Price Target: 55
I. Analyst Team Reports
Market Analyst
Market Report
Allegro MicroSystems (ALGM) traded at $47.87 on May 29, 2026. yfinance showed a 52-week range of $22.41-$52.80, a 50-day average of $40.87, and a 200-day average of $33.37.
The stock has already rerated strongly. The local yfinance history showed an 88.8% one-year return and 77.9% YTD return.
ALGM fits the semiconductor queue because it designs sensor ICs and application-specific power ICs for automotive and industrial markets. The AI linkage is indirect but credible through advanced industrial applications including AI data centers, robotics, energy infrastructure, motion control, and power management.
Market read: Buy with a $55 target, close to the yfinance median analyst target, because growth and margins are improving while valuation is already elevated.
Sentiment Analyst
Sentiment Report
Sentiment is constructive after FY2026 results and FY2027 Q1 guidance.
Q4 FY2026 net sales were $243.2 million, up 26% year over year. FY2026 net sales were $890.1 million, up 23% year over year.
Q4 automotive sales were $163.9 million, up 18% year over year, while industrial and other sales were $79.3 million, up 49% year over year.
Q1 FY2027 guidance calls for net sales of $245-$255 million, with the midpoint implying 23% year-over-year growth. Non-GAAP gross margin is expected at 50%-51%, and non-GAAP diluted EPS is expected at $0.19-$0.23.
Sentiment read: Buy because business momentum is clear, but the stock is close to its 52-week high.
News Analyst
News Report
The key current source is Allegro's Q4 and FY2026 results release.
Q4 FY2026 net sales were $243.2 million. GAAP gross margin was 47.0%, GAAP operating margin was 2.2%, and GAAP diluted EPS was -$0.09. Non-GAAP gross margin was 50.0%, non-GAAP operating margin was 15.6%, and non-GAAP diluted EPS was $0.17.
FY2026 net sales were $890.1 million. Non-GAAP gross margin was 49.4%, non-GAAP operating margin was 14.1%, and non-GAAP diluted EPS was $0.54.
Adjusted EBITDA was $170.1 million for FY2026, with adjusted EBITDA margin of 19.1%. FY2026 GAAP operating cash flow was $163.1 million, and non-GAAP free cash flow was $124.9 million.
The FY2026 Form 10-K says Allegro serves automotive and industrial markets, including advanced industrial markets such as AI data centers, robotics, and energy infrastructure.
News read: ALGM has both cyclical recovery and structural industrial semiconductor exposure, but valuation now requires continued execution.
Fundamentals Analyst
Fundamentals Report
ALGM fundamentals show growth, margin recovery, and positive cash generation.
yfinance showed market cap of approximately $8.91 billion, enterprise value of approximately $9.05 billion, total revenue of approximately $890.1 million, operating cash flow of approximately $163.1 million, free cash flow of approximately $150.0 million, total cash of approximately $168.8 million, and total debt of approximately $305.9 million.
The same snapshot showed revenue growth of 26.1%, gross margin of 46.5%, operating margin of 10.4%, profit margin of -1.7%, forward P/E of 32.51x, and price/sales of 10.02x.
The 10-K describes Allegro as a global leader in sensor ICs and application-specific power ICs that enable sensing, motion control, and power management in complex electromechanical and power conversion systems.
Fundamental read: Buy because growth and free cash flow are strong, but high price/sales and negative GAAP profit margin make the target disciplined.
II. Research Team Decision
Bull Researcher
Bull Research
The bull case is that Allegro is a differentiated analog and mixed-signal semiconductor supplier exposed to automotive electrification, industrial automation, robotics, energy infrastructure, and AI data center power needs.
Q4 sales rose 26% year over year, with industrial and other sales up 49%. FY2026 sales increased 23%, and FY2027 Q1 guidance implies another 23% year-over-year increase at the midpoint.
Non-GAAP gross margin reached 50.0% in Q4, and Q1 FY2027 guidance calls for 50%-51% non-GAAP gross margin. FY2026 non-GAAP free cash flow was $124.9 million, up materially from $22.0 million in FY2025.
Bull conclusion: ALGM can keep working if industrial and automotive design wins translate into durable growth and margins stay near 50%.
Bear Researcher
Bear Research
The bear case is valuation and cyclicality.
The stock has gained 88.8% over one year and 77.9% YTD in the local yfinance history. At 10.02x sales and 32.51x forward earnings, expectations already price in a strong recovery.
GAAP profitability is still not clean. Q4 GAAP diluted EPS was -$0.09, and yfinance showed a profit margin of -1.7%.
The 10-K risk framework includes semiconductor cyclicality, automotive and industrial demand risk, reliance on third-party wafer fabs, supply-chain issues, customer concentration, tariffs/export controls, pricing pressure, and yield/manufacturing execution risk.
Bear conclusion: ALGM could derate if FY2027 Q1 guidance is not exceeded, if automotive demand slows, or if high-multiple semiconductor names reprice.
Research Manager
Research Manager Synthesis
The bull case is strong FY2026 growth, industrial acceleration, 50% non-GAAP gross margin, positive free cash flow, and AI-adjacent exposure through data centers, robotics, energy infrastructure, power management, and motion control.
The bear case is that the stock is near its 52-week high, valuation is elevated, GAAP profitability is still mixed, and end-market cyclicality remains material.
The correct conclusion is Buy with a controlled target. The $55 target matches the yfinance median analyst target and is slightly above the mean target of $54.42.
Synthesis: assign Buy with a $55 target.
III. Trading Team Plan
Trader
Trader View
ALGM is above the $40.87 50-day average and $33.37 200-day average, and it is near the $52.80 52-week high.
Upside trigger: Q1 FY2027 sales above $255 million, non-GAAP gross margin above 51%, non-GAAP EPS above $0.23, stronger industrial/robotics/data-center demand, or additional automotive design wins.
Downside trigger: Q1 FY2027 sales below $245 million, margin pressure, automotive softness, industrial slowdown, supply-chain issues, or valuation compression.
Trading plan: Buy with a $55 6-12 month base-case target, but avoid assuming another large multiple expansion.
IV. Risk Management Team Decision
Aggressive Analyst
Aggressive Risk View
Aggressive investors can buy ALGM for automotive, industrial, robotics, energy infrastructure, and AI data center semiconductor exposure.
The risk is that the stock is already pricing in a strong fiscal 2027 recovery.
Aggressive conclusion: Buy.
Conservative Analyst
Conservative Risk View
Conservative investors should recognize that ALGM is near its 52-week high and trades at a high sales multiple.
Quality and growth are improving, but downside could be meaningful if guidance is missed.
Conservative conclusion: Hold for risk-sensitive accounts; Buy only on pullbacks or with small sizing.
Neutral Analyst
Neutral Risk View
The neutral view is constructive.
ALGM has strong momentum and relevant semiconductor exposure, but the stock now needs continued execution to justify valuation.
Neutral conclusion: Buy with disciplined target.
V. Portfolio Manager Decision
Portfolio Manager
Portfolio Manager Decision
Rating: Buy Price Target: 55
Horizon: 6-12 months Current Price Reference: $47.87 on 2026-05-29
Allegro MicroSystems is rated Buy. ALGM is included in the web-researched semiconductor queue because it designs sensor ICs and application-specific power ICs for automotive and industrial markets. Its AI relevance is indirect but meaningful through advanced industrial markets including AI data centers, robotics, and energy infrastructure, where sensing, motion control, and power management are important system functions.
The latest major financial update is Q4 and FY2026 results. Q4 net sales were $243.2 million, up 26% year over year. Automotive sales were $163.9 million, up 18% year over year, and Industrial and Other sales were $79.3 million, up 49% year over year.
FY2026 net sales were $890.1 million, up 23% year over year. FY2026 automotive sales were $628.6 million, up 17%, and Industrial and Other sales were $261.5 million, up 38%.
Q4 GAAP gross margin was 47.0%, GAAP operating margin was 2.2%, and GAAP diluted EPS was -$0.09. Q4 non-GAAP gross margin was 50.0%, non-GAAP operating margin was 15.6%, and non-GAAP diluted EPS was $0.17.
FY2026 non-GAAP gross margin was 49.4%, non-GAAP operating margin was 14.1%, and non-GAAP diluted EPS was $0.54. Adjusted EBITDA was $170.1 million, with adjusted EBITDA margin of 19.1%.
Cash generation improved meaningfully. FY2026 GAAP operating cash flow was $163.1 million, and non-GAAP free cash flow was $124.9 million, compared with $22.0 million in FY2025.
Q1 FY2027 guidance calls for net sales of $245-$255 million, with the midpoint implying 23% year-over-year growth. Non-GAAP gross margin is expected at 50%-51%, and non-GAAP diluted EPS is expected at $0.19-$0.23.
yfinance showed a latest price of $47.87, market cap of approximately $8.91 billion, enterprise value of approximately $9.05 billion, 52-week range of $22.41-$52.80, total revenue of approximately $890.1 million, revenue growth of 26.1%, gross margin of 46.5%, operating margin of 10.4%, profit margin of -1.7%, operating cash flow of approximately $163.1 million, free cash flow of approximately $150.0 million, total cash of approximately $168.8 million, total debt of approximately $305.9 million, forward P/E of 32.51x, price/sales of 10.02x, mean analyst target of $54.42, and median analyst target of $55.00.
The main risks are semiconductor cyclicality, automotive and industrial end-market softness, elevated valuation, GAAP profitability volatility, reliance on third-party wafer fabs, supply-chain constraints, customer concentration, tariffs/export controls, pricing pressure, manufacturing yields, and execution risk around new product ramps.
The $55 target reflects strong FY2026 execution, Q1 FY2027 guidance, industrial acceleration, 50% non-GAAP gross margin, and AI-adjacent industrial exposure. Buy is appropriate, but the target remains close to consensus because the stock has already rallied sharply.