Advanced Energy Industries (AEIS) Bank of America 2026 Global Technology Conference summary

Financial performance and outlook

• Achieved above-guidance revenue and profitability in Q1, surpassing a 40% gross margin milestone, with expectations to maintain or improve margins through the year and a long-term goal of 43%+.

• Raised full-year guidance, citing strong demand across all segments, especially in Semiconductor and Data Center, with no notable weaknesses identified.

• OpEx is projected to grow to $460 million for the year, targeting growth at about half the rate of revenue, supporting continued leverage and efficiency.

• Company expects to drop 35%-45% of incremental revenue to operating income, reflecting strong EPS leverage.

• Recent convertible note offering refinanced existing debt at better terms, lowering cost of capital and supporting internal and external investments.

Semiconductor segment

• Semiconductor orders surged in Q1, with expectations of over 20% YoY growth this quarter and more than 30% growth in the second half compared to last year.

• New products (eVerest, eVoS, NavX) are driving market share gains, higher prices, and improved margins, with significant revenue ramps expected in 2027 and 2028.

• Design wins are typically sole-source and last for years, providing long-term revenue annuities.

• Thailand factory opening in Q4 will accelerate semiconductor production to meet strong demand.

• Growth is incremental, not cannibalistic, with opportunities for upgrades and back-conversion in mature processes.

Data Center segment

• Data Center segment has seen eight consecutive record growth quarters, with at least 35% growth forecasted for this year.

• Short-term moderation in Q2 growth is attributed to customer supply chain constraints, not demand weakness.

• Opening Thailand factory in Q4 to expand Data Center capacity, with current facilities at full utilization.

• Focused on high power density and efficiency, with new 800-volt modular solutions receiving positive customer feedback.

• Second wave of non-hyperscale customers expected to contribute revenue starting in 2027, with similar margins to hyperscale business.