You can find today's earnings press release and presentation on our website at ir.advancedenergy.com. Any targets beyond current year presented today should not be interpreted as guidance. In the second quarter, we delivered record results with revenue and earnings above the high end of our guidance. Demand strengthened in all of our target markets, and solid factory execution allowed us to capture upside within the quarter.
Our investments in capacity and piece part inventory are allowing us to keep pace with increasing customer demand. We are working closely with some of our largest data center and semiconductor customers to qualify our new Thailand factory, where we now expect first production revenue in the fourth quarter. When Thailand is fully built out, we expect to have roughly $5 billion of revenue-generating capacity across our factory network. On the new product front, we continue to increase our investment in R&D, which is critical to maintaining our technology leadership and competitive edge.
The semiconductor equipment market is growing to record levels, driven by strong demand for leading-edge memory and logic, as well as increasing etch and dep intensity. We are executing well to meet this increased demand, delivering sequential revenue growth of over 27% in the second quarter. With additional design wins in the pipeline, we expect new product revenue to accelerate our revenue growth in 2027 and beyond. In data center computing, we see robust demand in the second half and now expect full-year revenue growth of at least 50%.
| Metric | Period | Current guidance |
|---|---|---|
| Revenue | Q3 2026 | ~$640M +/- $20M |
| Gross margin | Q3 2026 | 41%-41.5% (up from Q2 ex-tariff-refund) |
| Non-GAAP EPS | Q3 2026 | $3.00 +/- $0.25 on 41M shares |
| Operating expenses | Q3 2026 | $120M-$124M |
| Revenue growth | FY2026 | Low-to-mid 30% range |
| Data Center growth | FY2026 | At least 50% |
| Semiconductor growth | H2 2026 | Up almost 50% year-over-year |
| Gross margin | Q4 2026 | ~42% range |
| Full-year OpEx | FY2026 | ~$470M |
| Capital expenditures | FY2026 | $180M-$195M |
| Revenue growth | FY2027 | Over 20% (third consecutive year), aided by Thailand |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +30% to $574M (record) | Up 12% sequentially on strengthening demand across all markets and solid factory execution capturing upside. |
| Semiconductor revenue | +33% to $278M (record) | Record wafer-fab-equipment market driven by leading-edge memory/logic and higher etch/dep intensity; up 27% sequentially, shipping in line with demand. |
| Data Center Computing revenue | +35% to $192M | Down 1% sequentially as expected, then progressively improved as customers resolved downstream constraints, setting up a stronger second half. |
| Industrial & Medical revenue | +17% to $80M | Up 11% sequentially as market conditions improved and new-product wins ramped; distributor resales, orders, and inventory all improved. |
| Telecom & Networking revenue | +12% to $24M | Down 4% sequentially; several customers evaluating rack power solutions for AI-related (second-wave) applications. |
| Gross margin | +380 bps to 41.9% | Higher volume and favorable new-product mix; 40.7% excluding tariff refunds, still above guidance. |
| Operating margin | +730 bps to 21.9% | Record operating income of $125M on strong volume leverage, with OpEx up only 11% versus 30% revenue growth. |
| Non-GAAP EPS | +83% to $2.74 | Up from $2.09 in Q1 and $1.50 a year ago; included $0.04 tariff-refund benefit and a favorable 14% non-GAAP tax rate. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Capacity expansion and Thailand | Malaysia/Philippines/Mexico network | AE is increasing Malaysia output and qualifying its new Thailand factory (first revenue Q4) with premier data-center and semiconductor customers; fully built out, the network will have roughly $5 billion of revenue-generating capacity (already over $2.6 billion implied by Q3 guidance). | — |
| Semiconductor share gains | 2024 Analyst Day share-gain targets | Management says it is better positioned to gain share than ever, ahead of plan, via new eVerest/eVoS plasma-power platforms (yield/throughput advantages at leading-edge conductor/dielectric etch and deposition) and system-power wins in process and test tools, powering multi-year share gains. | — |
| Data center three growth vectors | Concentrated hyperscaler business | Growth comes from (1) expanding wins at four engineering-intensive hyperscalers, (2) 'second-wave' customers (outside the top hyperscalers, less engineering-intensive, using existing technology blocks) ramping in 2027 toward the size of AE's largest hyperscaler, and (3) 800-V products (initial revenue late 2027, high volume 2028). | — |
| 800-V data-center transition | 12V/48V architectures | AE developed multiple modular DC-DC and AC-DC 800-V solutions (98%-range efficiency, high density, low profile) receiving positive early-unit feedback; seen as a share-gain and content-per-rack opportunity, expected to coexist with 12V and 48V architectures. | — |
| Strategic inventory and supply chain | COVID-era component shortages | AE is deliberately building healthy, low-obsolescence piece-part inventory (turns down to ~2.5x) and maintaining high factory staffing to flex to upside and avoid constraining customers, funded by a strong balance sheet, with AP/AR improvements mitigating the working-capital impact. | — |
| Gross-margin drivers | Factory consolidations and volume | With factory-consolidation and much of the volume benefit realized, future margin gains (toward and beyond 43%) come primarily from a richer new-product mix (already contributing), continued manufacturing-efficiency improvement, and price actions kept broadly price-cost neutral. | — |
| Industrial & Medical recovery | Post-COVID destock 'hangover' | Bookings nearly doubled versus the prior two years across the last three quarters (distributor bookings +80%, resales +40%, channel sales +45%), on market recovery plus new-product wins ramping (electrosurgery, test & measurement, aerospace/defense, automation, robotics), with strength expected through 2027. | — |