Cognex Corporation (CGNX) | The Buildout — AI Infrastructure
The Verdict
Cognex makes machine vision systems — cameras, optics, lighting, edge compute and software — that inspect and identify parts on factory lines and in distribution centers. Its end markets include logistics, packaging, electronics, semiconductor and automotive, and it is extending into the data center supply chain by inspecting components and assembled server racks. It sells inspection equipment to the suppliers that build AI infrastructure, rather than building that infrastructure itself.
| Market Cap | — |
| Revenue (TTM) | $1.1B |
| Revenue Growth | +17.1% |
| EBITDA Margin (TTM) | 24.5% |
| Net Cash | $332M |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Adjusted EBITDA margin reached 32.2% in Q2 2026, the highest since Q2 2021, on the eighth consecutive quarter of margin expansion.
- Four of five end-market outlooks were raised in Q2 2026; logistics posted its 10th straight quarter of double-digit growth.
- Pricing moved from a 2024 headwind to neutral in 2025 and a net positive in H1 2026; management expects 2026 to finish net positive on pricing.
- Cognex added roughly 9,000 new customers in 2025 and about 4,500 year-to-date 2026, against an objective of doubling the customer base.
- The balance sheet had $302.5M of cash plus $101.8M of short-term investments against $72.5M of total debt as of July 5, 2026.
What We’re Watching
- One unnamed customer was 15% of 2025 revenue, up from 10% in 2024, and the concentration was not discussed on the 2026 earnings calls.
- Memory costs are a ~75 bps Q3 gross-margin headwind, up from ~50 bps previously guided, with some possible carry into Q4 and full offset through pricing only expected in 2027.
- Management describes visibility as three to four months while issuing its first full-year guide; analysts noted an implied Q4 organic step-down of about 13% versus Q3.
- Automotive revenue declined high single digits in Q2 2026 and Europe fell 15% in constant currency; both remain soft spots.
The thesis looks intact and, on the reported numbers, strengthening: margins are expanding, demand is broad, and management has moved from withholding full-year targets to issuing them. The caution is that the purest AI-infrastructure revenue line remains a low single-digit share, the first full-year guide rests on short-cycle visibility, and customer concentration is rising. The key open question is whether the implied Q4 step-down is seasonal, as management says, or the first sign of softer demand.
Earnings Beat
Cognex reported Q2 FY2026 revenue of $291.3M, up 17% year over year and a record quarterly level. Gross margin was 70.6% as reported; the company's adjusted gross margin was 71.5%, up 350 bps year over year. The standout was adjusted EBITDA of $94M, a 32.2% margin, up 81% year over year and the highest level since Q2 2021.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $291M | $268M | $249M | +16.9% |
| Gross margin | 70.6% | 71.1% | 67.4% | +320bps |
| EBITDA | $92M | $67M | $51M | +79.4% |
| EPS | $0.43 | $0.31 | $0.24 | +78.3% |
| Data center supply chain | Low single-digit % of revenue | n/a | n/a | >30% YoY |
Today, data center represents only a low single-digit percentage of revenue, but is growing more than 30% year-over-year.— Matt Moschner, CEO, 2026-08-06
Management tone: Management's tone moved from caution in Q1 2026 to confidence in Q2 2026. In Q1 it flagged increased macro uncertainty and withheld full-year profitability targets; in Q2 it said the demand environment had no material negative impact and issued full-year guidance for the first time. At the same time, management repeatedly re-anchored on short-cycle visibility of three to four months and said it had not baked in exceptional year-end demand.
Management Guidance
For Q3 FY2026 management guided revenue of $300M-$320M, adjusted EBITDA margin of 32%-35%, and adjusted EPS of $0.50-$0.54. For FY2026 it guided revenue of $1.13B-$1.15B, adjusted EBITDA margin of 29%-31%, and adjusted EPS of $1.64-$1.68, including about $0.11 per share of investment income. Management expects OpEx below prior-year levels and below H1, a gross margin below H1, and about 75 bps of memory cost headwind in Q3 that may extend into Q4.
Trajectory
Revenue has grown year over year for eight consecutive quarters, reaching $291.3M in Q2 FY2026 from $249.1M in Q2 FY2025. Gross margin on reported figures was 70.6% in Q2 FY2026 against 67.4% a year earlier, with gross margin expanding 370 bps, operating margin 490 bps and EBITDA margin 440 bps. Management attributes the gains to favorable mix and volume, pricing, cost reductions and operating leverage, with about 100% revenue flow-through in Q2; the offsets ahead are a guided H2 gross margin below H1 and the memory headwind.
The Model
The model projects FY+1 revenue of $1,155M and EBITDA of $358M, a 31.0% margin. For FY+2 it projects revenue of $1,305M and EBITDA of $437M, a 33.5% margin. The near term is anchored on management's FY2026 guide and broad end-market demand; FY+2 assumes continued operating leverage, a data center contribution, and durable semiconductor demand.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $994M | $1.2B | $1.3B |
| YoY Growth | — | +16.2% | +13.0% |
| EBITDA | $193M | $358M | $437M |
| EBITDA Margin | 19.4% | 31.0% | 33.5% |
Projections are the median of 5 independent model runs. The model’s revenue sits 6.7% above analyst consensus.
For Q3 FY2026 management guided revenue of $300M-$320M, adjusted EBITDA margin of 32%-35%, and adjusted EPS of $0.50-$0.54. For FY2026 it guided revenue of $1.13B-$1.15B, adjusted EBITDA margin of 29%-31%, and adjusted EPS of $1.64-$1.68, including about $0.11 per share of investment income. Management expects OpEx below prior-year levels and below H1, a gross margin below H1, and about 75 bps of memory cost headwind in Q3 that may extend into Q4.
What Could Go Right — and Wrong
- Data center grows from a low single-digit revenue share into a material, separately reported line.
- Semiconductor demand stays durable beyond a normal cycle, as management suggests.
- Pricing fully offsets memory costs in 2027 and gross margin holds at or above the Q2 2026 level.
- Revenue flow-through remains above 90% into 2027 with OpEx flat to down.
- Customer-base expansion and channel partners add revenue without proportional OpEx.
- Memory costs rise beyond the guided ~75 bps or are not offset in 2027.
- The implied Q4 revenue step-down proves demand-driven rather than seasonal.
- Single-customer concentration rises further, or that customer cuts orders.
- Data center remains a low single-digit revenue share and the AI-infrastructure contribution stays immaterial.
- Automotive and Europe weakness persists longer than management expects.
Looking Ahead
The next 12 months test the new disclosure posture. Cognex reports Q3 FY2026 against guidance of $300M-$320M revenue and a 32%-35% adjusted EBITDA margin, then must deliver a Q4 that the full-year guide implies is weaker sequentially. Management has promised a data center sizing update on future calls and points to 2027 for a memory offset through pricing and a shift from cost reduction to productivity.
- Q3 2026Q3 earnings call — Tests the $300-320M revenue and 32-35% adjusted EBITDA margin guide.
- FY2026Full-year results — Tests the first-ever FY2026 guide of $1.13-1.15B revenue.
- Future callsData center sizing — Management promised a full-potential update for the data center supply chain.
- 2027Memory cost offset — Management expects pricing to fully offset memory headwinds.
- 2027Productivity shift — Emphasis moves from cost reduction to growing with existing resources.
- Q1 2027Portfolio exit rolls off — The ~$5M per quarter divestiture drag runs through Q1 2027.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $914M | $994M | $1.1B | +8.7% |
| Gross Margin | 68.4% | 66.9% | 68.8% | 150bps |
| EBITDA | $148M | $193M | $267M | +30.6% |
| EBITDA Margin | 16.2% | 19.4% | 24.5% | +326bps |
| Net Income | $106M | $114M | $175M | +7.9% |
| Free Cash Flow | $134M | $237M | $268M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)68.8%
- EBITDA Margin (TTM)24.5%
- Net Margin (TTM)16.1%
- ROIC14.5%
- FCF Conversion100.4%
- SBC / Revenue4.5%
The Company
Cognex makes industrial machine vision systems — hardware and software that capture and analyze visual information so manufacturing and distribution lines can inspect and identify products. The 10-K describes the company as making advanced machine vision easy for manufacturing and distribution companies. Its products are used in logistics, packaging, electronics, semiconductor and automotive end markets, and management has begun sizing a data center supply chain opportunity that involves inspecting components and assembled server racks.
Cognex reports one operating segment, machine vision technology, and says it has a single company-wide management team rather than discrete operating segments. It is asset-light: the 10-K names six buildings, including a Natick, Massachusetts headquarters, distribution centers in Cork, Southborough and Singapore, and two optical-component production plants in Shenzhen, China and Bac Ninh, Vietnam that came with the 2023 Moritex acquisition. A significant portion of products is made by an unnamed third-party contractor in Indonesia, and certain components are available from only one source.
Business Segments
Competitive Landscape
Cognex's 10-K defines the competitive field by category rather than by name: other vendors of machine vision systems, controllers and components; manufacturers of image processing systems, sensors and components; and system integrators. No competitor is named in the filing text. Management argues that Cognex prices to the value created in each application and that its AI tools let it solve inspections that were previously not technically feasible to automate.
- KeyenceWiring-layer inference; not named in Cognex filings.
- OmronWiring-layer inference; not named in Cognex filings.
- Wiring-layer inference; not named in Cognex filings.
- ZebraWiring-layer inference; not named in Cognex filings.
- BaslerWiring-layer inference; not named in Cognex filings.
Supply Chain
Cognex sits upstream of manufacturers and distributors, buying components and contract manufacturing and selling inspection systems into factory and logistics automation. Its closest documented supplier ties are NVIDIA and Qualcomm edge AI silicon.
More on CGNX: Earnings recap