Alpha and Omega Semiconductor Limited (AOSL) | The Buildout — AI Infrastructure
The Verdict
Alpha and Omega Semiconductor makes power semiconductors — the parts that manage voltage and current on the boards and power shelves feeding servers and data-center racks. Its medium-voltage MOSFETs and power ICs sit inside hot-swap stages and 48V-to-12V intermediate bus converters built by power supply providers, module makers and ODMs, and its DC fans go into AI server racks. That puts the company one layer back from the AI compute itself: it does not build accelerators or systems, but its parts are used wherever power is converted and distributed. The company sells into a competitive market against much larger power semiconductor suppliers.
| Market Cap | — |
| Revenue (TTM) | $679M |
| Revenue Growth | −2.5% |
| EBITDA Margin (TTM) | 2.1% |
| Net Cash | $153M |
| Earnings Beats | 5 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Advanced Computing revenue moved from 25% to 31% of the Computing segment across the March and June quarters, and is guided above 40% in September, when management expects it to approach 20% of total company revenue.
- The AI and server business alone is guided to grow more than 60% sequentially in September and to represent the majority of Advanced Computing.
- Non-GAAP gross margin moved from 21.7% in the March quarter to 23.7% in June, with September guided at 24.5% — a step-up management attributes primarily to product mix, net of a typhoon impact.
- Two consecutive quarters of guidance landed at or above the midpoint: June revenue above the midpoint of a ~$168M ±$10M guide, and non-GAAP gross margin of 23.7% against a 23% ±1% guide.
- The $150M sale of approximately 20.3% of the JV Company closed in the June quarter, with the last $15M installment received, and cash stood at $180.8M.
What We’re Watching
- Consumer revenue is guided down roughly 25% sequentially in September, after a June quarter that was up 8%, on lower Home Appliances, Wearables and Gaming revenue.
- September is an adjustment period for traditional PC demand on memory and CPU shortages, and management describes December as still a little fuzzy.
- Two distributors, WPG and Promate, accounted for 51.3% and 22.1% of fiscal 2025 revenue; Customer B was 53.1% of nine-month 2026 revenue and 65.4% of accounts receivable at March 31, 2026.
- Operating cash flow was negative $10M in June, the third period running negative, and cash fell to $180.8M from $190.3M.
The picture is mixed and early. The composition of the business is visibly changing — Advanced Computing is a rising share of the Computing segment, gross margin has inflected, and management translated the AI sub-segment into a percent of total company revenue for the first time. The aggregate base has not followed: June revenue was down 3.5% y/y, and the September guide of ~$176M is still below the $176.5M year-ago quarter. The open question is whether the AI and server ramp sustains past September and pulls total revenue into growth, or stays a mix and margin story inside a flat-to-down base.
Earnings Beat
June-quarter revenue was $170.4M, down 3.5% y/y and up 4% sequentially, above the midpoint of guidance. Non-GAAP gross margin was 23.7%, up from 21.7% in the March quarter but below the 24.4% of a year earlier, with management attributing the sequential gain mostly to product mix and a smaller portion to utilization and operating expenses. The standout disclosure was Advanced Computing, up 35% sequentially to a record 31% of the Computing segment on AI, server, workstation and cloud applications.
| Metric | Q4 FY2026 | Q3 FY2026 | Q4 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $170M | $164M | $176M | −3.5% |
| Gross margin | 23.1% | 21.1% | 23.4% | -30bps |
| EBITDA | $4M | $0M | $4M | −7.9% |
| EPS | $-0.44 | $-0.46 | $-2.58 | −83.1% |
| Advanced Computing (% of Computing segment) | 31% | 25% | n/a | — |
This growth is expected to more than offset the well-publicized weakness in traditional PC applications caused by memory chip constraints, resulting in flattish sequential growth for the overall Computing segment.— Stephen Chang, CEO, 2026-08-12
Management tone: The tone moved from guarded bottoming to demonstrated inflection. On the May 7 call management called the December and March quarters a bottom for revenue and gross margin; the June print and the September guide validated that call. Management also became more specific, translating Advanced Computing into a percent of total company revenue for the first time, while staying explicit about what it would not commit to — 800V revenue timing, the size of the AI margin benefit, and December-quarter seasonality. On the typhoon that flooded portions of Shanghai packaging, the CFO quantified the impact as a few million dollars and some margin effect, folded into the September guide.
Management Guidance
For the September 2026 quarter (FQ1 2027), management guided revenue to ~$176M, GAAP gross margin to 23.8% ±1% and non-GAAP gross margin to 24.5% ±1%, GAAP OpEx to $52.5M ±$1M and non-GAAP OpEx to $46.5M ±$1M, interest income $0.6M higher than interest expense, income tax of $1.1M–$1.3M, and CapEx of $15M–$17M. By segment: Computing flattish sequentially, Consumer down approximately 25%, Communications up approximately 10%, and Power Supply and Industrial up nearly 30%. Advanced Computing is guided above 40% sequential growth and above 40% of Computing, approaching ~20% of total company revenue, with AI and server alone up more than 60% sequentially. Management attributes the 70 to 80 basis point gross-margin step-up primarily to better product mix, net of the typhoon impact.
Trajectory
Quarterly revenue ran $182.5M in the September 2025 quarter, $162.3M in December, $163.8M in March and $170.4M in June — recovering sequentially but still below the year-ago level, and down 2.5% y/y on a trailing-twelve-month basis at $679.0M. Gross margin bottomed at 21.1% in the March 2026 quarter and recovered to 23.1% in June on the reported basis; on the company's non-GAAP basis the path was 21.7% to 23.7%, with September guided at 24.5%. Management attributes the recovery predominantly to product mix, with a smaller contribution from utilization and operating expenses, and ties the second half of calendar 2026 to mix shift plus an improving pricing environment. Reported EBITDA remains thin at $3.5M (2.1% of revenue) in the June quarter and $14.1M (2.1%) trailing twelve months.
The Model
The model projects FY+1 revenue of 738M and EBITDA of 32M (4.4%), and FY+2 revenue of 850M and EBITDA of 77M (9.1%). The near-term anchor is the September guide and the mix shift toward Advanced Computing; reaching 738M implies growth through the balance of the fiscal year. FY+2 depends on whether Advanced Computing keeps scaling, whether Power Supply and Industrial holds its guided step-up, and whether the gross-margin recovery carries through to EBITDA as revenue grows.
| Metric | FY2026 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $679M | $738M | $850M |
| YoY Growth | — | +8.7% | +15.2% |
| EBITDA | $14M | $32M | $77M |
| EBITDA Margin | 2.1% | 4.4% | 9.1% |
Projections are the median of 5 independent model runs. The model’s revenue sits 3.9% above analyst consensus.
For the September 2026 quarter (FQ1 2027), management guided revenue to ~$176M, GAAP gross margin to 23.8% ±1% and non-GAAP gross margin to 24.5% ±1%, GAAP OpEx to $52.5M ±$1M and non-GAAP OpEx to $46.5M ±$1M, interest income $0.6M higher than interest expense, income tax of $1.1M–$1.3M, and CapEx of $15M–$17M. By segment: Computing flattish sequentially, Consumer down approximately 25%, Communications up approximately 10%, and Power Supply and Industrial up nearly 30%. Advanced Computing is guided above 40% sequential growth and above 40% of Computing, approaching ~20% of total company revenue, with AI and server alone up more than 60% sequentially. Management attributes the 70 to 80 basis point gross-margin step-up primarily to better product mix, net of the typhoon impact.
What Could Go Right — and Wrong
- Advanced Computing sustains sequential growth past the September quarter and holds near or above 20% of total revenue on a durable basis.
- Gross margin extends beyond the guided 24.5% as high-performance medium-voltage MOSFETs carry better pricing than the commodity base.
- Power Supply and Industrial converts its guided nearly 30% sequential increase and proves to be more than a one-quarter rebound from a depressed base.
- The R&D step-up lands in calendar 2026 as management framed it, setting up operating leverage in calendar 2027.
- 800V data-center architectures arrive sooner than management's hedge of some business next year, extending the medium-voltage content position.
- The PC and consumer correction deepens past the September adjustment period while the AI and server ramp slips, leaving total revenue with no offset.
- Advanced Computing growth turns out to be ramp of existing sockets rather than new wins — a split management has never quantified.
- A distributor inventory adjustment or credit event lands against a book where Customer B is 53.1% of nine-month revenue and 65.4% of accounts receivable.
- Larger peers capture the AI rack power content, stalling the mix shift while the legacy base stays weak.
- Typhoon recovery underdelivers, and the delayed Shanghai packaging revenue and margin are lost rather than deferred.
Looking Ahead
The next twelve months turn on whether the September guide converts and whether the mix shift becomes aggregate growth. Management points to higher gross margins in the second half of calendar 2026 on mix plus improving pricing, an R&D step-up concentrated in calendar 2026 with more standard growth afterward, and Advanced Computing contributing more meaningfully in the second half of 2026 and into 2027. Longer-dated items — 800V data-center architectures, the next graphics platform refresh, and the next-generation gaming console — are carried without firm revenue figures.
- Early November 2026September-quarter results — Tests the September revenue guide, 24.5% margin guide and Advanced Computing mix
- Second half calendar 2026Higher gross margins — Management ties mix shift and improving pricing to higher 2H gross margins
- Calendar 2026R&D step-up lands — Most of the R&D increase is expected to land this calendar year, per the CEO
- 2027800V data-center power — Management says some business is possible next year; no firm timeline given
- 2027Graphics platform refresh — No major graphics platform this year; next release expected sometime next year
- 2028Next-gen gaming console — Greater impact expected beginning 2028; not reaffirmed on the June call
Financials
Annual Summary
| Metric | FY2025 | FY2026 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $696M | $679M | $679M | -2.5% |
| Gross Margin | 23.1% | 22.3% | 22.3% | 80bps |
| EBITDA | $34M | $14M | $14M | -58.4% |
| EBITDA Margin | 4.9% | 2.1% | 2.1% | 279bps |
| Net Income | −$97M | −$42M | −$42M | +56.4% |
| Free Cash Flow | −$8M | −$17M | −$17M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)22.3%
- EBITDA Margin (TTM)2.1%
- Net Margin (TTM)-6.2%
- ROIC-5.3%
- FCF Conversion-118.4%
- SBC / Revenue-0.8%
The Company
Alpha and Omega Semiconductor designs and supplies power semiconductors. Its portfolio holds approximately 2,800 products across two families: power discretes — low, medium and high voltage power MOSFETs — and power ICs, which deliver power and regulate variables such as the flow of current and level of voltage. The 10-K states that a majority of revenue has come from power discrete products, and that products typically have three-year to five-year life cycles. The AI buildout reaches the company through high-performance medium-voltage MOSFETs used in hot swap and 48V-to-12V intermediate bus converters, power ICs for AI and data-center applications, and DC fans sold into AI server racks.
The company manufactures much of its own product. It operates an 8-inch wafer fabrication facility in Hillsboro, Oregon, wholly-owned packaging and testing facilities in Shanghai that handle most of its packaging and testing requirements, and a joint venture in the LiangJiang New Area of Chongqing that operates a power semiconductor packaging, testing and 12-inch wafer fabrication facility — described in the 10-K as an important supplier of wafers and assembly and test services. Go-to-market runs through direct OEM relationships, including Dell, Hewlett-Packard, Samsung Group and Stanley Black & Decker, and ODMs including Compal Electronics, Foxconn, Quanta Computer, Wistron and Delta Electronics. Distribution is concentrated: WPG and Promate accounted for 51.3% and 22.1% of revenue for the fiscal year ended June 30, 2025.
Business Segments
Competitive Landscape
The 10-K lists competitors in two groups: power discretes — Infineon, ON Semiconductor, STMicroelectronics, Toshiba, Diodes and Vishay — and power ICs — Monolithic Power Systems, ON Semiconductor, Richtek, Semtech, Texas Instruments and Vishay. Management's own competitive claim is narrow: it says high-performance medium-voltage MOSFETs face less competition, are performance-driven, and command better pricing and better margin. The supplier read-through shows the same industry tailwind lifting larger rivals — Monolithic Power Systems reports record revenue and a raised enterprise-data growth floor, ON Semiconductor expects AI data-center revenue to more than double in 2026, and Vishay reports price increases on about one-third of running part numbers — while AOSL's total revenue was down 3.5% y/y in the June quarter.
- Named in the 10-K power IC competitor list. The peer read-through carries record revenue of $981M, up 48% y/y, enterprise data up 45% q/q, a full-year enterprise-data growth floor raised from 85% to 130%, book-to-bill well above 1, and a claim of more than 30% share in CPU server power.
- ON Semiconductor Corp.Named in both the power discretes and power IC competitor lists. The peer read-through says AI data-center revenue is expected to more than double in 2026, lead times moved from 27 to 32 weeks, utilization was 83%, and a second round of price increases was underway.
- Named in the 10-K power discretes competitor list. The peer read-through says data-center revenue was raised to more than $1B in 2026 and well above $2B in 2027, with book-to-bill close to 2 overall and significantly above 2 in Communication Equipment and Computer Peripherals.
- Named in the 10-K power IC competitor list. The peer read-through says revenue was $5.5B, up 23% y/y, gross margin 61%, data center revenue doubled y/y and rose 20% q/q, and the company has started executing price increases.
- Named in both the power discretes and power IC competitor lists. The peer read-through says adjusted revenue was $919M, up 21% y/y, book-to-bill 1.32, backlog $1.9B or 6.1 months, and price increases on about one-third of running part numbers; it also notes customers increasingly requesting Western supply.
Supply Chain
AOSL sits in the power-management layer of the data-center bill of materials, feeding the power supply providers, module makers and ODMs that build server power shelves and boards. It is a component supplier, not a systems vendor, and no neighbor in the evidence names it directly.
More on AOSL: Earnings recap