AEIS
Advanced Energy Industries
Summary
What they do:
Design, manufacture, and sell precision power conversion, measurement, and control solutions — RF and DC power supplies for semiconductor etch and deposition tools, high-density AC-DC power shelves for data center racks, and industrial/medical power systems — serving the semiconductor equipment, data center computing, industrial/medical, and telecom markets.
Why they matter:
Advanced Energy sits at the intersection of the two largest AI infrastructure spending pools: semiconductor fab equipment and data center power. Their precision power supplies are inside every major etch and deposition tool (AMAT, LRCX, TEL), and their OCP-compliant power shelves are shipping to hyperscalers for AI server racks. Data center revenue grew 107% YoY in Q4 2025 to a record $178M, with full-year DC revenue of $587M (up 107% YoY), now representing ~37% of total revenue. The company is engaged with multiple marquee customers on 800-volt rack power solutions with ASP uplift potential. FY2025 revenue $1.80B (+21% YoY), with gross margins approaching 40%.
Recent performance:
FY2025 revenue $1.80B (+21% YoY). Non-GAAP EPS $6.41 (+73% YoY). Q4 revenue $489M at high end of guidance. Gross margin near 40%, best in five years. Guided 2026 high-teens revenue growth with data center >30% growth. Stock ~$380, market cap ~$14.9B.
Our Verdict
The precision power conversion company with dual exposure to semiconductor equipment and data center computing — data center revenue up 107% YoY and now 37% of sales, with hyperscaler power shelf design wins and semiconductor process power for advanced nodes — but at ~8x trailing revenue after a strong run, the stock prices in sustained dual-tailwind growth.
Structural trends
Structural
83
/ 100
Moat
7/10
Decades of RF power expertise, sole-source semiconductor positions, building DC power shelf franchise
AI Exp.AI Exposure
High~40% AI
Play Type
EstablishedAI Growth
~35%
Rel. Value
50
ATTRACTIVEAdvanced Energy Industries started in 1981 making power supplies for thin-film deposition — the process of depositing atomic-scale layers on semiconductor wafers. Over four decades, the company has become the premier supplier of precision power conversion for semiconductor manufacturing tools and has expanded into data center computing power through acquisitions (Artesyn Embedded Power in 2019, Excelsys in 2017, SL Power in 2022).
The company operates as a single segment (Power Electronics Conversion Products) but reports revenue across four end markets. Semiconductor Equipment (~40% of FY2025 revenue) is the historical core — Advanced Energy's RF generators, DC power supplies, and pulsed-power systems are embedded in virtually every etch and deposition chamber from AMAT, LRCX, and TEL. The transition to Gate-All-Around (GAA) transistors at 2nm requires the company's eVoS and NavX pulsed-power systems to deliver atomic-level plasma control. CEO confirmed these technologies are gaining "broad acceptance" across a broad customer set and are driving "structural share gain over the next five years" in dielectric etch and deposition below 2nm, solving yield and throughput problems at advanced nodes. Data Center Computing (~37% and growing fast) is the growth engine — high-density AC-DC power shelves compliant with the Open Compute Project (OCP) Open Rack v3 standard, bus converters, and rack-level power distribution for hyperscaler AI server deployments. Q4 data center revenue hit a record $178M (up 101% YoY), and full-year DC revenue reached $587M (up 107% YoY). Industrial and Medical (~17%) serves industrial coating, robotics, therapeutic devices, and life science applications. Telecom and Networking (~6%) is the smallest and slowest segment.
The financial trajectory is impressive. FY2025 revenue of $1.80B grew 21% YoY, driven by the data center surge and steady semiconductor demand. Gross margins improved from ~35% at the start of 2024 to nearly 40% exiting 2025 — the best performance in five years — as higher-value data center products and favorable mix drive profitability. Non-GAAP EPS of $6.41 grew 73% YoY. The company launched 26 new products in 2025 alone and is expanding manufacturing capacity in Thailand to support data center power shelf demand. The Thailand factory — a 500,000 sq ft flagship facility — is expected to deliver more than $1B in annual revenue-generating capacity when fully built out. Combined with $2.5B+ capacity in the existing footprint (Philippines, Mexico), total capacity reaches ~$3.5B by end of 2026. First products are qualifying in Thailand in 2026, with potential ramp as soon as Q4 2026.
For 2026, management guided high-teens revenue growth overall with data center expected to grow more than 30% (raised from an initial 25–30% guide). Gross margins are expected to exceed 40%. This positions AEIS for potential FY2026 revenue of ~$2.1B with meaningful earnings expansion.
Supply Chain Dependencies
Upstream Suppliers
The Catch
Advanced Energy's dual exposure to semiconductor equipment and data center power is genuinely differentiated — but both businesses are cyclical. Semiconductor equipment spending can decline 15–20% in downcycles, and data center power shelf competition (Delta Electronics, Flex) could intensify as the market scales. At ~$380 and ~8x trailing revenue, the stock prices in high-teens growth and 40%+ margins sustaining. If either cycle disappoints — WFE doesn't inflect in H2 2026 or DC power growth moderates — the correction will be sharp. The company also has customer concentration: AMAT, LRCX, and TEL are the primary semiconductor customers, and a few hyperscalers drive data center revenue.
If They Win
If the GAA/2nm transition drives a multi-year WFE upcycle with eVoS/NavX as the standard process power platform, data center power shelves become the hyperscaler standard for AI rack power delivery, industrial and medical recover, and Advanced Energy's Thailand manufacturing expansion delivers margin improvement, the company grows to $3B+ in revenue with 42%+ gross margins and $10+ in non-GAAP EPS. At 30x earnings, that's a $300+ stock — but from ~$380, the win scenario is about earnings catching up to the valuation rather than further multiple expansion.
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Not financial advice. All scores generated via AI algorithms using public data.