10-Q · May 4, 2026
Advanced Energy Industries (AEIS) reported a robust Q1 2026, with revenues increasing to $511 million, a 26.3% rise from $405 million in Q1 2025. The company's gross margin improved to 39.3%, up from 37.2%, and EPS grew…
Earnings analysis · 10-Q
AEIS earnings analysis
Filed August 3, 2026 · Our reading of the company's report
The latest report
Advanced Energy delivered a strong Q2, with revenue up 30.0% year over year to $574.1 million and GAAP operating margin expanding to 16.6% from 7.2%. Growth was led by AI-linked Semiconductor Equipment and Data Center…
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Advanced Energy delivered a strong Q2, with revenue up 30.0% year over year to $574.1 million and GAAP operating margin expanding to 16.6% from 7.2%. Growth was led by AI-linked Semiconductor Equipment and Data Center Computing, while all four reported end markets increased. GAAP EPS rose year over year to $1.29 but was held back by a $31.8 million convertible-note conversion charge; liquidity rose to $1,396.5 million of cash, although elevated $86.1 million first-half capex constrained free-cash-flow conversion.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $1.29
What stood out
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Revenue accelerated 30% year over year
Q2 revenue reached $574.1 million, up $132.6 million (30.0%) from $441.5 million a year earlier. Sequential revenue was up $63.1 million (12.3%) versus the implied Q1 level of $511.0 million, calculated from first-half revenue of $1,085.1 million.
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Material gross and operating leverage
GAAP gross margin expanded 410 basis points to 41.1% from 37.0%, while operating margin increased 940 basis points to 16.6% from 7.2%. Management attributed gross-margin improvement to mix, higher volume, and 120 basis points from tariff refunds.
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AI markets drove broad-based growth
All four end markets grew year over year: Data Center Computing rose 35.2% to $191.5 million and Semiconductor Equipment grew 32.8% to $278.3 million. Management cited hyperscaler AI investment, prior design wins, and AI-driven semiconductor-equipment demand.
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EPS rose despite conversion charge
GAAP diluted EPS from continuing operations was $1.29, versus $0.67 a year ago; non-GAAP EPS increased to $2.74 from $1.50. GAAP earnings included a $31.8 million loss on induced debt conversion.
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Cash liquidity expanded substantially
Liquidity strengthened following the convertible issuance: cash and cash equivalents were $1,396.5 million at June 30, 2026, with another $600.0 million available under the undrawn revolver.
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Capacity and ERP investment stepped up
First-half operating cash flow increased $4.3 million year over year to $79.0 million, but capital expenditures more than doubled to $86.1 million from $42.0 million. Capex was about 7.9% of first-half revenue of $1,085.1 million and reflects factory-capacity and ERP investments.
What to watch
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Convertible refinancing adds execution and dilution risk
The $31.8 million induced-conversion loss reduced Q2 GAAP profitability, and the company issued $1.15 billion of 0% 2031 Notes while retaining $136.7 million of 2028 Notes at June 30, 2026. The remaining 2028 Notes are scheduled for redemption on September 23, 2026.
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Working capital and capex pressure cash conversion
Working capital consumed cash as accounts receivable rose with higher revenue and inventory increased to support anticipated demand. Despite $79.0 million of first-half operating cash flow, $86.1 million of capex produced an implied first-half free-cash-flow deficit of about $7.1 million.
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No formal risk-factor update; supply and trade risks remain
Item 1A states there were no material changes to risks disclosed in the 2025 Form 10-K. Nonetheless, management says AI-related component demand is extending lead times and increasing prices, while tariffs, trade policy, and Middle East instability could become material after contributing 120 basis points of current-quarter tariff refunds to margin.
Management's outlook
The 10-Q provides no quantitative revenue or EPS outlook. Management qualitatively expects Semiconductor Equipment, Data Center Computing, Industrial and Medical, and Telecom and Networking demand trends to continue or improve through the remainder of 2026.
Earlier filings 4
10-K · February 13, 2026
Advanced Energy (AEIS) delivered a stronger FY2025 operating performance driven by semiconductor and data-center end markets, continued R&D investment, and ongoing manufacturing consolidation. Management executed a new…
10-Q · August 5, 2025
Advanced Energy reported strong Q2 results: revenue of $441.5 million (up $76.6M or 21.0% versus Q2 2024) and diluted EPS of $0.67 (vs $0.39 prior year). Operating income rose to $31.6 million from $12.9 million and…
10-K · February 18, 2025
Advanced Energy positions itself to outgrow wafer fabrication equipment (WFE) by focusing on higher-content plasma power and adjacent high-voltage/system power applications, completed the Airity acquisition (June 20,…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.