Advanced Energy’s second quarter saw meaningful growth, with management attributing the positive outcome to a combination of robust demand across semiconductor and data center markets and improved factory execution. CEO Stephen Kelley highlighted that new product introductions and a more favorable product mix contributed to higher gross margins, while operational efficiency at facilities in Malaysia and the ongoing ramp-up of the Thailand factory helped capture upside. Kelley also noted that pricing actions in mature product lines were implemented mainly to offset higher input costs, ensuring margin stability as demand accelerated across all target end markets.
Is now the time to buy AEIS? Find out in our full research report (it’s free for active Edge members).
Advanced Energy (AEIS) Q2 CY2026 Highlights:
- Revenue: $574.1 million vs analyst estimates of $543.6 million (30% year-on-year growth, 5.6% beat)
- Adjusted EPS: $2.74 vs analyst estimates of $2.21 (23.8% beat)
- Adjusted Operating Income: $125.5 million vs analyst estimates of $106.1 million (21.9% margin, 18.3% beat)
- Revenue Guidance for Q3 CY2026 is $640 million at the midpoint, above analyst estimates of $577.6 million
- Adjusted EPS guidance for Q3 CY2026 is $3 at the midpoint, above analyst estimates of $2.46
- Operating Margin: 16.6%, up from 7.2% in the same quarter last year
- Market Capitalization: $13.02 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Advanced Energy’s Q2 Earnings Call
- Matthew Prisco (Cantor Fitzgerald): Asked about the drivers behind increased positivity in the data center business compared to three months ago and the time frame for accelerating growth. CEO Stephen Kelley attributed improvement to supply chain resolutions and outlined three growth vectors: hyperscaler wins, second wave customers ramping in 2027, and 800-volt product adoption in 2028.
- Joseph Quatrochi (Wells Fargo): Inquired about the strategy behind increased piece part inventory and its impact on supply chain flexibility. CFO Paul Oldham explained the approach is to support customer ramp plans and minimize revenue constraints, emphasizing a strong balance sheet and proactive inventory management.
- Sreekrishnan Sankarnarayanan (TD Cowen): Questioned why semiconductor revenue growth was not outpacing the broader market despite strong customer performance. Kelley responded that year-to-year variations exist, but the company expects nearly 50% second-half growth and strong positioning for share gains.
- Shane Brett (Morgan Stanley): Sought clarification on the timeline and potential revenue contribution from second wave data center customers. Kelley estimated that revenue parity with hyperscalers could take until 2028 or 2029, with several wins in the pipeline.
- Elizabeth Sun (Citi): Asked about the company’s focus on a select group of hyperscaler customers and balancing growth with second wave customers. Kelley explained that hyperscalers require intensive engineering resources, so the company leverages second wave customers for less resource-intensive growth using modular technology blocks.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will monitor (1) the ramp-up of production at the Thailand facility and its impact on both semiconductor and data center revenues, (2) traction for new product platforms in plasma power, system power, and 800-volt architectures, and (3) continued margin improvement as the mix shifts toward higher-value products. Progress in the Industrial & Medical segment and execution on capacity investments will also be key signposts.
Advanced Energy currently trades at $324.92, up from $296.38 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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