Advanced Energy Industries
Designs and manufactures proprietary power (RF/DC, plasma, precision measurement) subsystems sold into OEM equipment; revenue mix of high-margin design-in components qualified into customer tools plus aftermarket/service, increasingly weighted to AI data-center rack power.
Earnings, margins, COGS & capex
AEIS is in a strong up-cycle: a semiconductor-capex recovery plus an exploding AI data-center power franchise drove +26% revenue growth and record non-GAAP gross margin above 40% in Q1 2026. Balance sheet is net-cash, FCF is positive and rising, and the earnings run-rate is inflecting up on both volume and mix. Valuation is rich, pricing in continued data-center outperformance.
Income statement — where each revenue dollar goes
% of revenueOf every $1 of revenue, ~60¢ is cost of goods and ~21¢ operating expense, leaving ~19¢ of operating profit.
Revenue trend
Margins
expanding; management-cited first quarter above 40%, guided +20-50bps in Q2
rising with volume + mix
record quarter, +66% YoY
expanding on operating leverage (+560bps YoY)
COGS structure
COGS is dominated by electronic components, power semiconductors, magnetics and contract-manufactured assemblies; gross margin gains come from higher-value AI power products, factory utilization and manufacturing efficiency rather than input deflation.
Capex
FY2025 capex was $107.4M; capex is stepping up in 2026 to fund capacity expansion for AI data-center and semiconductor demand. Management still targets FY2026 free cash flow at or above FY2025's ~$127.6M despite the higher spend.
Latest earnings
EPS beat but guidance-driven selloff: non-GAAP EPS $2.09 vs ~$1.97 consensus (+6%); revenue $511M above ~$505M consensus. Shares fell ~8% on the report as Q2 guidance underwhelmed despite the beat.
Q2 2026: revenue ~$540M +/- $20M, non-GAAP EPS $2.18 +/- $0.25; FY2026 revenue growth guided low-to-mid-20s%, data center ~mid-30s%
- Q1 2026 revenue
- $511M (+26% YoY)
- Non-GAAP EPS
- $2.09 (+70% YoY)
- GAAP EPS (cont. ops)
- $1.59
- Adjusted EBITDA
- $108M (+66% YoY, record)
- Semiconductor revenue
- $219.4M
- Data Center Computing revenue
- $194.2M (>2x YoY)
- Industrial & Medical
- $72.0M
- Telecom & Networking
- $25.4M
Growth drivers
- Data Center Computing — revenue grew ~107% in 2025 (to $587.3M) and guided to ~mid-30s% growth in 2026, driven by hyperscaler AI rack power (NDQ-series 50V-to-12V bus converters into Nvidia Blackwell/Rubin-class GPU racks)
- New 800V DC AI data-center power platform (ADH series, up to 8kW peak/half-brick, 98.2% peak efficiency, launched June 2026) extending AE into megawatt-class AI racks
- Semiconductor recovery: WFE spend rebound lifting the largest segment ($219.4M in Q1 2026)
- Margin mix shift toward differentiated, IP-heavy power products
- Industrial & medical stabilization and design-win pipeline
Reported financials — SEC EDGAR
Audited GAAP figures pulled from SEC filings · latest filing 2026-02-13. The audited primary-source spine — not financial advice.
Revenue — annual (GAAP)
Margins & balance sheet — FY’25
Bull & bear
AEIS is transforming from a cyclical semiconductor-power supplier into a structural beneficiary of AI data-center power, with record margins, a net-cash balance sheet, and FY2026 growth guidance in the low-to-mid-20s%.
- Data Center Computing grew ~107% in 2025 and is guided to ~mid-30s% growth in 2026 - a durable secular demand curve tied to AI compute, not just the semi cycle
- New 800V/megawatt-class rack power platforms (ADH series, 98.2% peak efficiency) expand serviceable content per AI rack and deepen the Nvidia-ecosystem tie-in
- Non-GAAP gross margin crossed 40% for the first time with further expansion guided - mix shift to differentiated power products looks structural, not one-off
- Concurrent semiconductor recovery lifts the core segment, giving two engines at once
- Net cash (~$223M) plus rising FCF funds capacity expansion and optional M&A/buybacks without dilution risk
At ~35x forward non-GAAP earnings and ~64x trailing GAAP, AEIS prices in sustained AI-driven outperformance while carrying real cyclicality and concentration risk that could reverse quickly.
- Data-center revenue is concentrated in a few hyperscalers; an AI capex pause or a single design loss would hit the fastest-growing, highest-multiple segment
- The core semiconductor segment remains cyclical - a WFE downturn would undercut the largest revenue line
- Valuation (P/E ~64 GAAP, EV/EBITDA ~27x est.) leaves little margin for error; shares fell ~8% on the May report on soft Q2 guidance and dropped a further ~12.6% on 2026-07-02
- Competition from MKS Instruments and Comet in RF/plasma power, plus risk of OEM in-sourcing power, pressures share and pricing
- China export controls and semi supply-chain shocks are exogenous risks AEIS cannot control
What it is worth
Forward multiples cross-checked with growth/mix; EV adjusted for ~$223M net cash
~$200-230
AI-capex digestion and/or a semi pause slow growth to high-single/low-double digits; multiple de-rates to ~25x on a lower EPS base.
~$300-330
EPS run-rate ~$8.75-9.25 with guidance met; multiple holds ~34-36x forward, roughly current price.
~$380-420
FY2026 non-GAAP EPS trends toward ~$9.50-10 as data center exceeds mid-30s% growth and gross margin pushes past 41%; market keeps a ~40x growth multiple.
At $311.27 (2026-07-02 close), AEIS trades ~64x trailing GAAP P/E (verified P/E 64.3), ~35x forward non-GAAP EPS (annualizing a ~$8.50-9 run-rate off Q1 $2.09 + Q2 guide $2.18), and ~27x EV/EBITDA (est.) - a growth multiple that requires sustained AI data-center outperformance. Bull case rests on data-center compounding at mid-30s% with margin expansion; bear case on cyclicality and concentration reverting the multiple.
SWOT
Strengths
- Deep IP in precision RF/plasma and DC power qualified into mission-critical semiconductor process tools
- Net-cash balance sheet (~$223M net cash) funding capacity expansion without leverage
- Fast-scaling, high-visibility AI data-center power franchise tied to Nvidia GPU roadmaps
- Record non-GAAP gross margin (>40%) and expanding operating leverage
Weaknesses
- Exposure to the cyclical semiconductor capital-equipment cycle
- Customer concentration in a handful of large semi OEMs and now hyperscalers
- Lower-margin, slower Telecom & Networking and parts of Industrial/Medical
- Rich valuation leaves little room for execution slips or guidance misses
Opportunities
- 800V DC and megawatt-class AI rack power as data-center power density explodes
- Content growth per AI server generation (Blackwell -> Rubin) as power precision demands rise
- Share gains vs MKS and Comet in RF/plasma power
- Aftermarket and service attach on a growing installed base
Threats
- AI data-center capex digestion or hyperscaler order pauses
- Semiconductor down-cycle compressing the core segment
- Customer concentration / design-loss risk to a competitor
- China export controls and geopolitical disruption to semi supply chains
- Competitive pressure and potential in-sourcing of power by large OEMs
Moats, dependencies & bottlenecks
Moats
Power subsystems are qualified into customer process tools and AI racks; switching suppliers requires re-qualification, creating multi-year stickiness.
Large patent portfolio in precision power conversion and measurement; hard to replicate at required precision/efficiency (e.g. 98.2% peak efficiency 800V converters).
Co-development with semi OEMs and hyperscalers on next-gen power creates relationship-based advantage but depends on staying ahead technically.
Broad product range across markets provides cross-sell and manufacturing scale vs smaller point competitors.
Dependencies
End-market demand Largest segment tracks fab equipment spending, which is cyclical and can swing sharply.
End-market demand Data-center growth is tied to a few hyperscalers and to Nvidia Blackwell/Rubin ramp cadence; concentrated and roadmap-dependent.
Lam Research) Customer concentration A large share of core revenue flows through a small number of process-tool OEMs.
Power semiconductors, magnetics and CM capacity gate the ability to ramp AI power volumes.
Regulatory / geopolitical Semiconductor export controls and China demand shifts can disrupt shipments and end-market demand.
Advantages
- First-mover content in megawatt-class 800V AI rack power with best-in-class efficiency (98.2% peak)
- Two secular/cyclical engines (AI data center + semiconductor recovery) firing together
- Net-cash balance sheet and rising FCF fund growth internally
- Record and expanding non-GAAP gross margins from a structural mix shift
Weaknesses
- Cyclical exposure via the semiconductor segment
- Customer/end-market concentration in semi OEMs and hyperscalers
- Rich valuation amplifies downside on any guidance miss
- Lower-growth, lower-margin Telecom & Networking segment
Bottlenecks
- Manufacturing capacity to meet AI data-center and semiconductor demand simultaneously (driving elevated 2026 capex)
- Supply of high-power semiconductors and magnetics for the AI power ramp
- Engineering talent for next-gen high-density/high-voltage power design
- Margin ceiling from lower-value Telecom/Industrial mix
Top signals & trends
Top signals
Management confidence in both AI data-center and semi demand.
Structural mix shift toward differentiated power products.
Fastest-growing, highest-visibility franchise.
Q2 guidance underwhelmed; high expectations already embedded.
Separate from the earnings reaction; consistent with a rich-multiple name de-rating on broader pressure.
Extends serviceable content in next-gen AI racks.
Trends
Rising power per rack increases AEIS content per AI system; core secular driver.
WFE spend rebound lifts the core segment out of its trough.
Each generation demands more precise, higher-density power AEIS supplies.
Adds regulatory friction and China-demand uncertainty.
AI infrastructure spend could digest after a build-out surge.
Ecosystem & competitor graph
Suppliers feed the company; customers pull from it. Line thickness shows the strength of each tie (supply-chain dependency, customer earnings contribution). Hover to isolate a tie.
Supplies MOSFETs/SiC power devices used in AEIS power products.
Supplies power semiconductors (SiC/silicon) for high-density converters.
Provide outsourced assembly capacity for power subsystems.
Transformers, inductors and capacitors critical to high-density converters.
Major semiconductor-equipment OEM embedding AEIS power into process tools.
Key etch/deposition OEM customer for RF/plasma power.
Metrology/inspection OEM using precision power and measurement subsystems.
Buy AEIS rack and DC-DC power for AI clusters (Nvidia-ecosystem builds); concentrated demand, specific names not disclosed.
Closest peer in RF/plasma power and semiconductor subsystems; broader portfolio via Atotech.
Swiss RF power and plasma-control specialist competing directly in semiconductor process power.
Semiconductor subsystems/subassemblies supplier; adjacent competitor for OEM content.
Fluid/gas delivery and subsystem supplier to semi OEMs; adjacent, not direct in power.
High-density power modules increasingly relevant in AI/data-center power - overlapping in the fast-growing data-center segment.