Camtek Ltd. (CAMT) | The Buildout — AI Infrastructure
The Verdict
Camtek makes the inspection and metrology tools that check chips as they are packaged and stacked. Its systems inspect integrated circuits and measure IC features on wafers from the back end of the line up to the beginning of assembly, and they are sold to the IDMs, OSATs, and foundries that build advanced packages. The AI buildout runs through HBM memory stacks and 2.5D/3D packaging, which need defect inspection and bump-height metrology to ramp. Camtek sells into that step, making it a second-derivative AI play, and it is now adding a first-derivative AI software layer through the Visual Layer acquisition.
| Market Cap | — |
| Revenue (TTM) | $509M |
| Revenue Growth | +8.0% |
| EBITDA Margin (TTM) | 23.8% |
| Net Cash | $142M |
| Earnings Beats | 5 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Order intake reached >$600M year-to-date, with 80% in advanced packaging and deliveries running through 2026 into 2027. Management described the flow as steady since Q1.
- Advanced Packaging was ~75% of Q2 2026 revenue and is guided to ~80% of Q4; HPC/AI-related revenue was 'over 50%, 55% plus' and is guided toward 'closer to 60%' exiting 2026.
- The newest platforms, Eagle G5 and Hawk, were ~50% of Q2 systems revenue, up from ~30% of 2025 revenue, and are guided to double in 2026.
- Headline customer concentration eased — the top customer fell from 15% of revenue in FY2023 to 11% in FY2025.
- The balance sheet held $815.8M in cash, deposits and securities at June 30, 2026; most of the 2026 convertible notes were repurchased in September 2025.
What We’re Watching
- Backlog conversion is the test: most new second-half orders are for 2027 delivery, and management says it needs 1–2 more quarters for the full 2027 picture.
- Margin expansion is guided, not delivered — the targets are 52.5%–53% gross and 30%–32% operating margin exiting 2026, with OpEx rising on R&D and Visual Layer.
- Working capital is absorbing cash: $12.2M of operating cash on a record quarter, DSO at 105 days, and accounts receivable up to $153.9M.
- Supply is a stated risk — the 20-F discloses single- and limited-source suppliers, while peers and distributors describe tightening lead times and precision-optics strain.
On the evidence in the source, the thesis looks strengthening. Between the May and August 2026 calls, the largest disclosed order anchor more than doubled (a >$260M order/forecast to >$600M of year-to-date intake), guidance was raised and newly quantified, and the product cycle widened. The delivered numbers have not yet matched that pace — Q2 revenue was up 8% year-on-year — so the case rests on backlog conversion. The open question is whether that book converts on schedule and at the guided margins, or whether the second-half ramp and the 2027 order build slip.
Earnings Beat
Camtek's second quarter of 2026 was its record quarter: revenue of $133.2M, up 8% year-on-year and about 10% sequentially, ahead of the $129M–$131M guide. Gross margin was 50.1% on the audited basis. The standout was the order book — more than $600M received year-to-date, with deliveries running through 2026 into 2027.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $133M | $122M | $123M | +8.0% |
| Gross margin | 50.1% | 50.1% | 50.8% | -70bps |
| EBITDA | $30M | $27M | $32M | −5.6% |
| EPS | $0.45 | $0.61 | $0.68 | −33.8% |
| Year-to-date order intake | >$600M | n/a | n/a | — |
Since the beginning of the year, we have experienced a significant acceleration in order intake, bringing total orders received year-to-date to more than $600 million with deliveries scheduled through the remainder of 2026 and into 2027.— Rafi Amit, Chief Executive Officer, August 10, 2026
Management tone: Management's commentary moved from qualitative to quantified between the two calls on file. In May 2026 the language was directional — an 'unprecedented start to the year' and a 'surge' expected in the second half. By the August 2026 call the same topics came with numbers: a $133.2M record quarter, a quantified year-to-date order book with a stated mix, a quantified Q3 revenue range, and named margin exit targets. On capacity, the COO said the company is 'very confident' and sees 'no issues or obstacles.' One promised item — AI software revenue timing for the second half of 2026 — was not updated on the August call.
Management Guidance
For Q3 2026, management guides revenue of $158M–$160M, about a 20% sequential increase. For the second half, revenue is guided more than 30% above the first half, and Advanced Packaging revenue about 45% above the first half, with Q4 Advanced Packaging roughly 70% higher than Q1. Advanced Packaging is guided to ~80% of Q4 revenue, and HPC/AI to 'closer to 60%' exiting 2026. Management targets exiting 2026 at 52.5%–53% gross margin and 30%–32% operating margin. Full-year Advanced Packaging growth is guided at 35%–45%, and China at ~45% of 2026 revenue. OpEx is expected to rise but 'not to the extent that it will exceed the revenue growth.' Management points to continued growth into 2027 but says it needs '1 more quarter to 2 quarters' for the full picture, and has issued no formal 2027 forecast.
Trajectory
Revenue growth has slowed through the recent quarters. Sequentially, revenue rose 4.0% in the June 2025 quarter, 2.2% in September, and 1.7% in December, then fell 5.0% in the March 2026 quarter. Q2 2026 stepped back up to $133.2M, the record quarter, up 8% year-on-year. Over the longer arc, FY2025 revenue of $496.1M grew 16% over FY2024, which itself grew 36% over FY2023. Gross margin has held near 50%, while operating and EBITDA margins have compressed over the past year. What would change the trajectory is the order book: >$600M booked year-to-date against $254.9M of first-half revenue, with the guide scheduling a Q3 step of about 20% sequentially.
The Model
The model projects FY+1 revenue of $594.5M with EBITDA of $168M — a 28.25% margin — and FY+2 revenue of $813.0M with EBITDA of $265M, a 32.65% margin. The FY+1 revenue figure sits close to the roughly $590M–$595M that management's second-half guide implies. FY+2 assumes advanced packaging and HBM demand keeps building into 2027, a year management says it has visibility into but has not forecast. Revenue and EBITDA are the model's only published outputs.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $496M | $594M | $813M |
| YoY Growth | — | +19.9% | +36.8% |
| EBITDA | $128M | $168M | $265M |
| EBITDA Margin | 25.8% | 28.2% | 32.6% |
Projections are the median of 4 independent model runs. The model’s revenue sits 15.3% above analyst consensus.
For Q3 2026, management guides revenue of $158M–$160M, about a 20% sequential increase. For the second half, revenue is guided more than 30% above the first half, and Advanced Packaging revenue about 45% above the first half, with Q4 Advanced Packaging roughly 70% higher than Q1. Advanced Packaging is guided to ~80% of Q4 revenue, and HPC/AI to 'closer to 60%' exiting 2026. Management targets exiting 2026 at 52.5%–53% gross margin and 30%–32% operating margin. Full-year Advanced Packaging growth is guided at 35%–45%, and China at ~45% of 2026 revenue. OpEx is expected to rise but 'not to the extent that it will exceed the revenue growth.' Management points to continued growth into 2027 but says it needs '1 more quarter to 2 quarters' for the full picture, and has issued no formal 2027 forecast.
What Could Go Right — and Wrong
- The year-to-date order book converts on schedule, lifting second-half 2026 revenue more than 30% above the first half.
- The margin exits print: 52.5%–53% gross margin and 30%–32% operating margin at end-2026.
- The 2027 order book keeps building through the 1–2 quarters management says it needs, producing a formal 2027 picture.
- Photonics scales past 5% of orders in 2027, diversifying the business beyond HBM and CoWoS.
- The Visual Layer AI software line produces reported revenue, adding a first-derivative AI layer.
- Backlog conversion slips — a Q3 or Q4 revenue miss would undercut the whole second-half ramp.
- Input costs bite before mix and leverage help, and the gross-margin exit target misses.
- A competitor takes a named advanced-packaging socket; Onto and Nova both name Camtek a direct competitor.
- The 2027 order book fails to build, leaving the backlog's quality in question.
- Cash conversion stays weak — DSO stretches beyond 105 days and operating cash stays near zero.
Looking Ahead
The next 12 months turn on backlog conversion. Q3 2026 revenue is guided to a roughly 20% sequential step-up, with double-digit sequential growth guided again in Q4 and margins targeted higher at the exit. The nearest dated event is the SEMICON West investor breakfast on October 14, 2026, where management will present its market outlook and technology road map, and where Hawk and hybrid-bonding development is flagged for more detail. Formal 2027 guidance is not expected for 1–2 more quarters.
- October 14, 2026SEMICON West breakfast — Market outlook, strategy and Hawk/hybrid-bonding detail
- Q3 2026Q3 revenue print — ~20% sequential guide tests the backlog-conversion story
- Q4 2026Q4 revenue and mix — Sequential double-digit growth; Advanced Packaging ~80% of revenue
- Next 1–2 quartersFormal 2027 picture — Management says it needs 1–2 quarters for full 2027 visibility
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $429M | $496M | $509M | +15.6% |
| Gross Margin | 48.8% | 50.5% | 50.1% | +162bps |
| EBITDA | $112M | $128M | $121M | +14.5% |
| EBITDA Margin | 26.1% | 25.8% | 23.8% | 25bps |
| Net Income | $118M | $51M | $38M | -57.2% |
| Free Cash Flow | $0M | $0M | $0M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)50.1%
- EBITDA Margin (TTM)23.8%
- Net Margin (TTM)7.4%
- ROIC16.4%
- SBC / Revenue2.3%
The Company
Camtek develops and manufactures high-end inspection and metrology equipment for the semiconductor industry. Its systems inspect integrated circuits and measure IC features on wafers throughout production, covering the back end of the line, the mid-end, and up to the beginning of assembly. That places Camtek one step back from the advanced-packaging bottleneck: HBM memory stacks and 2.5D/3D packaging lines need defect inspection and bump-height metrology to ramp, and Camtek sells those tools to the IDMs, OSATs, and foundries building them.
Camtek operates two production sites: Migdal Ha'Emek, Israel, which is also headquarters and the primary manufacturing and R&D location, and Bergisch Gladbach, Germany, which came with the FRT acquisition completed in October 2023 for $101.8M. The company reports as one segment. Revenue is geographically concentrated — Asia was 92% of Q2 2026 revenue — with China alone at ~49% of FY2025 revenue, guided to ~45% for 2026.
Business Segments
Competitive Landscape
Camtek competes in advanced-packaging inspection and metrology. The source material names Onto Innovation, Nova, and KLA as the alternative tools HBM and advanced-packaging manufacturers could qualify if Camtek's tools disappeared — a substitution the source estimates would take two to three quarters. Camtek itself discusses competition in broad terms, says it holds a 'dominant position in the OSATs market,' and describes the China landscape as thin at the top — 'only one meaningful player that really competes with us in China… pressured at the lower end of applications.'
- Onto Innovation (ONTO)Named in the source material as one of the alternative inspection/metrology tools HBM and advanced-packaging manufacturers could qualify.
- KLA (KLAC)Named in the source material as one of the alternative inspection/metrology tools HBM and advanced-packaging manufacturers could qualify.
- Nova (NVMI)Named in the source material as one of the alternative inspection/metrology tools HBM and advanced-packaging manufacturers could qualify.
Supply Chain
Camtek sits one step back from the advanced-packaging bottleneck, buying components and subsystems from outside suppliers and assembling inspection and metrology systems at two sites. No neighboring company in the source names Camtek directly. The 20-F discloses reliance on single- and limited-source suppliers for 'a number of essential components and subsystems.'
Related companies
See all Chip Making companies → · How this layer works: Chapter 1, The Chip →
More on CAMT: Earnings recap