There’s a tech name on Josh Brown’s list that’s at the nexus of the data center buildout
(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — I bet you’ve never heard of this one. I hadn’t either until it popped up on my radar thanks to the relentless data center components rally. Pun intended on the radar thing because that’s the origin story of MACOM Technology Solutions Holdings (MTSI) . It was founded in 1950 by civilian engineers who worked at the MIT Radiation Laboratory during World War II developing microwave radar technology for the armed forces in Lowell, Massachusetts. They’re still doing a lot of defense industry work 75 years later but now there’s a new driver. You can have the best GPUs and servers in the world but if they’re not communicating with each other fast enough, they might as well be a pile of stones. That’s where MACOM comes in. Think of this company as the connectivity layer between all of the technology in an AI data center. The company makes radio frequency, microwave and analog semiconductors. Its first customer was the U.S. Army Signal Corps, which needed magnetrons for radar systems. The company spent decades supplying defense and telecom customers, building expertise in moving radio frequency signals efficiently over short distances, before going through several corporate iterations (M/A-COM, then MACOM Technology Solutions) and landing where it is today. It is still headquartered in Lowell. The AI data center buildout has created demand for faster communication between components inside the data center, not just faster chips. MACOM’s RF and signal expertise has become directly applicable to a market that didn’t exist when the business was founded. What brought it to our attention and onto the Best Stocks in the Market list was an explosive move in early May when the company reported earnings. The numbers were fine but the guidance was a wake-up call for the analysts who had previously been covering a sleepy little electronic component supplier. Management reported record bookings with a 1.5x book to bill ratio and raised the data center outlook to over 60% growth for the fiscal year, a sharp jump from the prior 35 to 40% target. Q3 revenue guidance of $331 to $339 million landed well above the $299.81 million consensus, and the full year data center growth outlook moved from 35 to 40% up to over 60%, with industrial and defense growth expected above 20% for the year. All three business segments at MACOM are on fire, led by demand for optical modules and other high-speed products for the hyperscalers. Sean has some more color on the story, I’ll be back with the chart. Best Stock Spotlight: MACOM Technology Solutions Holdings, Inc. (MTSI) Sean — As Josh noted, MACOM supplies the communication components needed to transfer data between servers. Unlike Nvidia, which provides the compute layer (GPUs that actually process data), MACOM is in the connectivity layer — the components that transmit data at high speed between GPUs. NVIDIA owns the “brain” of the AI data center, while MACOM supplies the “nervous system” that enables the massive bandwidth required to feed GPUs with data. This same technology is highly related to the components within high-tech military equipment that the company was founded on. This business has three segments, industrial & defense, data center and telecom. Within Industrial & Defense, its chips go into radar systems, missile defense, electronic warfare, and secure military communications. The Data Center segment is where the growth is coming from. MACOM sells components essential to the cloud computing buildout. The third is Telecom, which covers both satellite broadband (the components inside low-orbit satellites and their antennas) and 5G cellular base stations. This firm hit the cover off the ball during their last earnings report. MACOM posted record quarterly revenue of $289.0M, up 9% sequentially and 22% year over year. Adjusted gross margin expanded to 58.5% and adjusted EPS came in at $1.09, up from $0.85 a year ago, representing 28% growth. Both Industrial & Defense and Data Center revenue hit record levels. The big takeaway was the massive book-to-bill ratio at 1.5x — the largest quarterly bookings in company history, with strength across all three segments, especially in Data Center. A book-to-bill ratio of 1.5x means MACOM booked $1.50 in new orders for every $1 of product it actually shipped, signaling that demand is far outpacing current sales and giving strong visibility into future revenue growth. Looking forward to Q3 FY2026, MACOM guided revenue to $331 million–$339 million, adjusted gross margin of 59%–60%, and adjusted EPS of $1.31–$1.37. Segment growth is expected to be led by data center at roughly 35% sequential growth. For the full year, management raised its data center growth target to over 60% year over year and now expects total company revenue growth of roughly 30%. With a record backlog fueling its data center momentum and AI buildout exposure, plus durable tailwinds in defense and satellite, the market is pushing this stock to new highs. Risk management Josh — MTSI spent the second half of 2025 in a long, choppy base between $110 and $150. The breakout came in January 2026, when the stock cleared that range and began stair-stepping higher into the high $200s by February. From there it consolidated for about two months, holding support in the high $200s through March rather than giving back the breakout. And then the May 7 earnings happened, when the stock gapped sharply higher and ran from the high $200s to a fresh high near $400 within a matter of sessions. Since then it has pulled back to the current $367, digesting that vertical move without breaking the uptrend that’s been intact since January. This digestion period could go on for a while, which is a good thing. Momentum has cooled off to a neutral 53 on the RSI, which could be the pause that refreshes before the next leg higher. There’s no rush to buy this but the ticker deserves a spot on your screen. For risk management on MTSI, the trader stop and the investor stop should be treated very differently here. Traders can lean on the 50 day moving average, currently sitting around $330, as a tactical level. A close below that on volume tells you the recent pullback from the $400 area has turned into something more than a routine digestion of gains. The 200-day moving average, down near $220, is too far from the current price near $367 to be useful as a working stop for anyone managing risk in real time. Instead, investors should look at the support shelf the stock carved out earlier this year, the consolidation zone around $260 to $280 where price tested and held more than once during the January through March base before the next leg higher. That zone represents the more relevant level for anyone thinking in terms of a longer holding period rather than a trade. This is a fairly small market cap and, obviously, this is now a high beta stock. It’s not for everyone. If you’re going to play, honor thy stops. They’re a late reporter so expect an earnings call in the late July / early August window. DISCLOSURES: We currently own shares of MTSI for clients in our Porterhouse strategy, additional details here. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. 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