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AEIS Q3 Earnings Beat on Semiconductor and Data Center Strength
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Key Takeaways
AEIS Q3 earnings surged 109.8%, while revenues jumped 50.3% year over year.
Semiconductor Equipment sales grew 64%, while Data Center Computing revenues rose 49.3%.
Advanced Energy raised its 2026 revenue growth outlook to 40%, with robust growth expected in 2027.
Advanced Energy Industries (AEIS - Free Report) reported third-quarter 2026 non-GAAP earnings of $3.65 per share, up 109.8% year over year and beating the Zacks Consensus Estimate by 19.28%.
Revenues increased 50.3% year over year to $696.4 million, surpassing the consensus estimate by 7.74%. Results benefited from record Semiconductor Equipment and Data Center Computing sales, stronger customer demand and improved factory execution. Semiconductor Equipment revenues surged 63.9% year over year.
AEIS Sees Record Semiconductor Equipment Sales
Semiconductor Equipment revenues reached a record $322.2 million, increasing 15.8% sequentially and 64% year over year. Growth benefited from investments in leading-edge wafer manufacturing capacity, stronger demand for etch and deposition equipment, and expanding system power applications.
Advanced Energy secured several plasma power design wins for advanced-node processes and two additional wins in semiconductor testing. Management expects new plasma power products, including eVerest, eVoS and NavX, to begin contributing more meaningfully in 2027, supporting market share gains.
Advanced Energy Industries, Inc. Price, Consensus and EPS Surprise
The company expects more than 10% of its semiconductor revenues in 2027 to come from new products. Management also anticipates semiconductor growth to match or exceed wafer fabrication equipment market growth next year.
Advanced Energy Benefits From AI Infrastructure Demand
Data Center Computing revenues reached a record $256.2 million, increasing 33.8% sequentially and 49.3% year over year. Stronger hyperscale customer demand, new program ramps and improved factory execution supported growth.
Advanced Energy secured additional design wins among second-wave customers, including enterprise and neocloud operators. Management expects these programs to begin contributing incremental revenues in 2027, complementing continued hyperscale growth.
The company showcased its modular 800-volt power distribution board and liquid-cooled power technology at the OCP Global Summit. These solutions support evolving AI infrastructure power requirements. Management expects next-generation hyperscale programs, second-wave customers and 800-volt technology adoption to drive longer-term growth.
AEIS Reports Growth Across Industrial and Telecom Markets
Industrial & Medical revenues increased 13.1% sequentially and 27.1% year over year to $90.5 million. The business recorded its fourth consecutive quarter of year-over-year growth, benefiting from stronger demand and higher factory output.
Distribution resales continued to outpace sales into the channel. Advanced Energy also secured design wins in medical imaging, life sciences, test and measurement and aerospace and defense. Its newly launched Defiant Future power supplies expand opportunities in ruggedized applications.
Telecom & Networking revenues totaled $27.5 million, increasing 13.2% sequentially and 15.1% year over year. AI-related applications supported customer demand during the reported quarter.
Advanced Energy Expands Operating Margins
Third-quarter non-GAAP gross margin was 42.1%, expanding 300 basis points (bps) year over year and 20 bps sequentially. Excluding the second-quarter tariff-refund benefit, gross margin improved 140 bps sequentially, reflecting higher volumes and manufacturing efficiencies.
Non-GAAP operating expenses increased 19.3% year over year and 7.5% sequentially to $123.4 million. As a percentage of revenues, expenses declined to 17.7% from 22.3% a year ago.
Non-GAAP operating income reached a record $169.8 million. The non-GAAP operating margin expanded to 24.4% from 21.9% in the preceding quarter and 16.8% in the year-ago period, reflecting stronger operating leverage.
AEIS Strengthens Cash Position
As of Sept. 30, 2026, cash and cash equivalents were $1.42 billion compared with $1.40 billion as of June 30. Total debt stood at $1.27 billion, resulting in net cash of approximately $159 million.
Third-quarter operating cash flow from continuing operations was $66 million compared with $85.6 million in the preceding quarter.
Advanced Energy Raises 2026 Growth Outlook
For the fourth quarter of 2026, Advanced Energy expects revenues of $735 million, plus or minus $25 million. Non-GAAP earnings are projected to be $3.90 per share, plus or minus 30 cents.
Management expects non-GAAP gross margin between 42% and 42.5%, with operating expenses ranging from $126 million to $128 million.
The company raised its 2026 revenue growth outlook to approximately 40% from the previously projected low-to-mid-30% range. Second-half Semiconductor Equipment revenue growth is now expected to exceed 60% year over year, while full-year Data Center Computing growth is projected in the high-50% range.
Management expects robust revenue growth to continue in 2027, supported by customer investments, new products and expanding manufacturing capacity. It also maintains its longer-term gross margin target above 43%.
AEIS’s Zacks Rank & Other Stocks to Consider
Advanced Energy currently sports a Zacks Rank #1 (Strong Buy).
View the Zacks #1 Rank List
Image: Bigstock
AEIS Q3 Earnings Beat on Semiconductor and Data Center Strength
Key Takeaways
Advanced Energy Industries (AEIS - Free Report) reported third-quarter 2026 non-GAAP earnings of $3.65 per share, up 109.8% year over year and beating the Zacks Consensus Estimate by 19.28%.
Revenues increased 50.3% year over year to $696.4 million, surpassing the consensus estimate by 7.74%. Results benefited from record Semiconductor Equipment and Data Center Computing sales, stronger customer demand and improved factory execution. Semiconductor Equipment revenues surged 63.9% year over year.
AEIS Sees Record Semiconductor Equipment Sales
Semiconductor Equipment revenues reached a record $322.2 million, increasing 15.8% sequentially and 64% year over year. Growth benefited from investments in leading-edge wafer manufacturing capacity, stronger demand for etch and deposition equipment, and expanding system power applications.
Advanced Energy secured several plasma power design wins for advanced-node processes and two additional wins in semiconductor testing. Management expects new plasma power products, including eVerest, eVoS and NavX, to begin contributing more meaningfully in 2027, supporting market share gains.
Advanced Energy Industries, Inc. Price, Consensus and EPS Surprise
Advanced Energy Industries, Inc. price-consensus-eps-surprise-chart | Advanced Energy Industries, Inc. Quote
The company expects more than 10% of its semiconductor revenues in 2027 to come from new products. Management also anticipates semiconductor growth to match or exceed wafer fabrication equipment market growth next year.
Advanced Energy Benefits From AI Infrastructure Demand
Data Center Computing revenues reached a record $256.2 million, increasing 33.8% sequentially and 49.3% year over year. Stronger hyperscale customer demand, new program ramps and improved factory execution supported growth.
Advanced Energy secured additional design wins among second-wave customers, including enterprise and neocloud operators. Management expects these programs to begin contributing incremental revenues in 2027, complementing continued hyperscale growth.
The company showcased its modular 800-volt power distribution board and liquid-cooled power technology at the OCP Global Summit. These solutions support evolving AI infrastructure power requirements. Management expects next-generation hyperscale programs, second-wave customers and 800-volt technology adoption to drive longer-term growth.
AEIS Reports Growth Across Industrial and Telecom Markets
Industrial & Medical revenues increased 13.1% sequentially and 27.1% year over year to $90.5 million. The business recorded its fourth consecutive quarter of year-over-year growth, benefiting from stronger demand and higher factory output.
Distribution resales continued to outpace sales into the channel. Advanced Energy also secured design wins in medical imaging, life sciences, test and measurement and aerospace and defense. Its newly launched Defiant Future power supplies expand opportunities in ruggedized applications.
Telecom & Networking revenues totaled $27.5 million, increasing 13.2% sequentially and 15.1% year over year. AI-related applications supported customer demand during the reported quarter.
Advanced Energy Expands Operating Margins
Third-quarter non-GAAP gross margin was 42.1%, expanding 300 basis points (bps) year over year and 20 bps sequentially. Excluding the second-quarter tariff-refund benefit, gross margin improved 140 bps sequentially, reflecting higher volumes and manufacturing efficiencies.
Non-GAAP operating expenses increased 19.3% year over year and 7.5% sequentially to $123.4 million. As a percentage of revenues, expenses declined to 17.7% from 22.3% a year ago.
Non-GAAP operating income reached a record $169.8 million. The non-GAAP operating margin expanded to 24.4% from 21.9% in the preceding quarter and 16.8% in the year-ago period, reflecting stronger operating leverage.
AEIS Strengthens Cash Position
As of Sept. 30, 2026, cash and cash equivalents were $1.42 billion compared with $1.40 billion as of June 30. Total debt stood at $1.27 billion, resulting in net cash of approximately $159 million.
Third-quarter operating cash flow from continuing operations was $66 million compared with $85.6 million in the preceding quarter.
Advanced Energy Raises 2026 Growth Outlook
For the fourth quarter of 2026, Advanced Energy expects revenues of $735 million, plus or minus $25 million. Non-GAAP earnings are projected to be $3.90 per share, plus or minus 30 cents.
Management expects non-GAAP gross margin between 42% and 42.5%, with operating expenses ranging from $126 million to $128 million.
The company raised its 2026 revenue growth outlook to approximately 40% from the previously projected low-to-mid-30% range. Second-half Semiconductor Equipment revenue growth is now expected to exceed 60% year over year, while full-year Data Center Computing growth is projected in the high-50% range.
Management expects robust revenue growth to continue in 2027, supported by customer investments, new products and expanding manufacturing capacity. It also maintains its longer-term gross margin target above 43%.
AEIS’s Zacks Rank & Other Stocks to Consider
Advanced Energy currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the broader Zacks Computer and Technology sector include ACI Worldwide (ACIW - Free Report) , Analog Devices (ADI - Free Report) and CAMTEK (CAMT - Free Report) . Each stock presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ACI Worldwide shares have gained 22.2% in the year-to-date period. ACI Worldwide is set to report third-quarter 2026 results on Nov. 5.
Shares of Analog Devices have risen 52.3% year to date. Analog Devices is set to report fourth-quarter fiscal 2026 results on Nov. 24.
Shares of CAMTEK have rallied 1.2% year to date. CAMTEK is slated to report third-quarter 2026 results on Nov. 4.