Cognex Corporation (CGNX) | The Buildout — AI Infrastructure
The Verdict
Cognex makes industrial machine-vision systems, barcode readers, and vision software that help factories and distribution centers inspect products automatically. Its edge AI systems and cloud-based OneVision platform train and run inspection models at the point of manufacture, which matters for AI infrastructure because the data center supply chain needs the same inspection discipline for components, server racks, and assembled equipment.
| Market Cap | — |
| Revenue (TTM) | $1.0B |
| Revenue Growth | +13.8% |
| EBITDA Margin (TTM) | 21.6% |
| Net Cash | $223M |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Q2 2026 adjusted EBITDA margin hit 32.2%, up 1,150 basis points YoY, the eighth consecutive quarter of expansion.
- Full-year 2026 guidance implies about 87% flow-through on incremental revenue, up from 70% in 2025.
- Data center supply chain revenue is growing more than 30% YoY, and logistics grew from single-digit share to Cognex's largest vertical.
- China revenue rose 42% in Q2 2026 and 40% year-to-date on localization investments over the prior 12 to 18 months.
- Approximately 9,000 new customers were added in 2025 and 4,500 year-to-date through Q2 2026.
What We’re Watching
- Q3 2026 actuals versus guidance of revenue $300–320 million and adjusted EBITDA margin 32–35%.
- Q4 2026 implied sequential revenue step-down of roughly 13%; management attributes it to seasonality and portfolio exits.
- Memory cost inflation now expected to hit Q3 2026 gross margin by about 75 basis points, with possible residual Q4 impact.
- Data center market sizing disclosure; management said it is sizing the full potential but gave no date.
The evidence shows the thesis is strengthening: record revenue, margin expansion ahead of management's own prior target, first-time full-year guidance, and a nascent data center supply chain opportunity all support an upward trajectory. The key open question is whether the short-cycle business can navigate the Q4 implied step-down and memory cost inflation without disrupting the margin trajectory.
Earnings Beat
Q2 2026 revenue grew 17% year over year, or 16% in constant currency, to a record quarterly level. Adjusted gross margin was 71.5%, up 350 basis points year over year, and adjusted EBITDA was $94 million, up 81% year over year.
| Metric | Q1 FY2026 | Q4 FY2025 | Q1 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $268M | $252M | $216M | +24.3% |
| Gross margin | 71.1% | 65.7% | 66.8% | +430bps |
| EBITDA | $67M | $42M | $34M | +97.4% |
| EPS | $0.31 | $0.19 | $0.14 | +121.7% |
| Free cash flow ($M) | $68.0M | $42.3M | $40.0M | +70% YoY |
Q2 was another strong quarter for Cognex and further evidence that our strategy is driving results.— Matt Moschner, CEO, August 6, 2026
Management tone: Management's tone shifted from deliberately cautious in Q1 to more confident in Q2. It issued first-time full-year guidance, raised almost all end-market outlooks, and described demand as favorable with no material negative impact from macroeconomic or geopolitical events, while repeating that visibility is about three to four months.
Management Guidance
For Q3 2026, management guided revenue of $300–320 million, adjusted EBITDA margin of 32–35%, and adjusted EPS of $0.50–0.54; at the midpoint that is about 12% revenue growth, or 17% excluding the $13 million Q3 2025 partnership benefit. For full-year 2026, management guided revenue of $1.13–1.15 billion, adjusted EBITDA margin of 29–31%, and adjusted EPS of $1.64–1.68, implying about 87% flow-through on incremental revenue. Management flagged that 2026 adjusted EPS includes about $0.11 per share of investment income.
Trajectory
Revenue is accelerating, with Q1 FY2026 at $268.4 million and Q2 2026 at roughly $292 million, up 17% year over year. Adjusted EBITDA margin reached 32.2% in Q2, up from 20.6% a year earlier, supported by favorable mix, volume, and cost reduction. The audited context shows gross, operating, and EBITDA margins expanding and trailing twelve-month free cash flow conversion at 114% in Q2.
The Model
The model projects FY+1 revenue of $1,117 million and EBITDA of $313 million, a 28.0% margin. FY+2 revenue is projected at $1,270 million with EBITDA of $381 million, a 30.0% margin, driven by continued adoption in the data center supply chain and semiconductor demand.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $994M | $1.1B | $1.3B |
| YoY Growth | — | +12.3% | +13.7% |
| EBITDA | $193M | $313M | $381M |
| EBITDA Margin | 19.4% | 28.0% | 30.0% |
Projections are the median of 5 independent model runs. The model’s revenue sits 5.1% above analyst consensus.
For Q3 2026, management guided revenue of $300–320 million, adjusted EBITDA margin of 32–35%, and adjusted EPS of $0.50–0.54; at the midpoint that is about 12% revenue growth, or 17% excluding the $13 million Q3 2025 partnership benefit. For full-year 2026, management guided revenue of $1.13–1.15 billion, adjusted EBITDA margin of 29–31%, and adjusted EPS of $1.64–1.68, implying about 87% flow-through on incremental revenue. Management flagged that 2026 adjusted EPS includes about $0.11 per share of investment income.
What Could Go Right — and Wrong
- Data center supply chain moves from low single-digit revenue to a named, quantifiable growth pillar; management is still sizing the market.
- OneVision adoption translates into visible revenue from the hundreds of customers already using the platform.
- Semiconductor demand remains durable and double-digit, matching management's raised full-year outlook.
- Land-and-expand converts the 9,000 new 2025 customers and 4,500 year-to-date 2026 customers into broader share of wallet.
- Pricing fully offsets memory cost inflation by 2027 and keeps gross margin near first-half levels.
- Memory price inflation rises further; the Q3 gross margin headwind is already about 75 basis points with possible Q4 residual.
- The implied Q4 sequential revenue step-down of roughly 13% turns out to be demand softening rather than seasonality.
- Automotive remains weak in Europe and logistics growth moderates as management expects.
- The unnamed 15% customer reduces orders or the Indonesia contract manufacturer or sole-source components are disrupted.
- Data center supply chain remains niche at low single-digit revenue with no named deployment or market size.
Looking Ahead
The next twelve months turn on Q3 and Q4 2026 results, completion of remaining noncore exits by Q4 2026, and management's promised data center market sizing update. Management expects pricing to fully offset memory cost inflation by 2027, but OneVision adoption metrics and In-Sight 3900/6900 order conversion from Automate demos have no specified timing.
- Q3 2026Q3 results — Tests revenue $300–320M guide and 75bps memory headwind on gross margin.
- Q4 2026Noncore exits complete — Management expects remaining portfolio exits reflected in Q4 results.
- Q4 2026Q4 revenue step-down — Tests seasonality explanation against implied ~13% sequential decline.
- Full-year 2026First full-year guidance result — Tests revenue $1.13–1.15B and 29–31% EBITDA margin.
- By 2027Pricing offsets memory inflation — Management expects full pricing offset of memory cost headwinds.
- No date specifiedData center market sizing — Management says it is sizing the full potential and will update on future calls.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $914M | $994M | $1.0B | +8.7% |
| Gross Margin | 68.4% | 66.9% | 68.0% | 150bps |
| EBITDA | $148M | $193M | $2.2B | +30.6% |
| EBITDA Margin | 16.2% | 19.4% | 21.6% | +326bps |
| Net Income | $106M | $114M | $143M | +7.9% |
| Free Cash Flow | $134M | $237M | $2.0B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)68.0%
- EBITDA Margin (TTM)21.6%
- Net Margin (TTM)13.6%
- ROIC12.4%
- FCF Conversion106.5%
- SBC / Revenue4.8%
The Company
Cognex makes advanced machine vision easy, helping manufacturing and distribution companies become faster, smarter, and more efficient through automation. It offers In-Sight vision systems and sensors, VisionPro software, DataMan barcode readers, the OneVision cloud platform, and SLX logistics devices. The company operates as one reportable segment, machine vision technology, with products used across logistics, packaging, electronics, automotive, semiconductor, and the data center supply chain.
Cognex is headquartered in Natick, Massachusetts, with distribution centers in Cork, Ireland; Southborough, Massachusetts; and Singapore, plus optical-components plants in Shenzhen, China and Bac Ninh, Vietnam. A significant portion of products is manufactured by an unnamed third-party contractor in Indonesia, and certain components are available from only one source. The company is executing a sales-force transformation and cost-reduction program, and in Q2 2026 it shifted emphasis from cost reduction to productivity optimization.
Business Segments
Competitive Landscape
Cognex's filings describe competition from other machine vision vendors, controllers, components, image processing systems, sensors, and system integrators, without naming specific companies. The supplied criticality assessment names Keyence and Teledyne as possible alternative vision systems.
- KeyenceNamed as possible alternative vision system in the criticality assessment; not discussed in Cognex filings.
- TeledyneNamed as possible alternative vision system in the criticality assessment; not discussed in Cognex filings.
Supply Chain
Cognex buys components and embedded processors and sells inspection systems into industrial and logistics end markets. No neighbor transcript in the supplied material mentions Cognex by name; ecosystem corroboration is indirect.
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