Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 3, 2026 · Beat 7 of last 7 quarters
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Advanced Energy's record quarter and raised guidance underscore the accelerating AI infrastructure buildout, with data center revenue expected to grow at least 50% in 2026 after doubling in 2025. The company's capacity expansion, including the new Thailand factory, is directly tied to supporting hyperscale and second-wave data center demand, as well as semiconductor equipment growth. The 800-volt product ramp in 2028 signals continued content-per-rack expansion as AI power architectures evolve.
Advanced Energy delivered record Q2 results with revenue of $574M, up 30% YoY, and EPS of $2.74, up 83% YoY, both above the high end of guidance. Semiconductor revenue hit a record $278M, up 27% QoQ, while data center revenue was flat sequentially at $192M as expected, with demand improving through the quarter. Gross margin expanded 380 bps YoY to 41.9% (40.7% excluding tariff refunds), and operating margin reached 21.9%, a multi-year high. The company completed a $1.15B convertible note offering in May, raising cash to $1.4B, and invested $50M in CapEx to expand capacity, including accelerated Thailand buildout.
Management raised full-year 2026 revenue growth guidance to the low-to-mid 30% range (from low-to-mid 20s), driven by stronger demand across all markets. Semiconductor second-half revenue is expected to grow nearly 50% YoY, and data center full-year growth was raised to at least 50% (from mid-30s). Q3 revenue guidance is approximately $640M ± $20M with gross margin of 41%–41.5% (excluding tariff refunds) and EPS of $3.00 ± $0.25. Management expects record revenue in both Q3 and Q4, with Q4 gross margin in the 42% range, and reiterated line of sight to over 43% gross margin. The new Thailand factory is expected to contribute first production revenue in Q4, with capacity to support over 20% growth in 2027. The tone was confident, citing strong design win pipeline, second-wave data center customers ramping in 2027, and 800-volt products entering high-volume production in 2028.
“We are fortunate to be a leading player in 2 large and fast-growing markets, AI data center and semiconductor.”
on Market positioning
“We believe that adoption of these platforms will drive market share gains for AE in the coming years.”
on New product adoption
“We are working closely with some of our largest data center and semiconductor customers to qualify our new Thailand factory, where we now expect first production revenue in the fourth quarter.”
on Thailand capacity
Can you offer more color on the increased positivity you're seeing versus 3 months ago in data center? How are you thinking about the mix today? And what does accelerating growth into 2027 mean?
Customers have resolved supply chain issues, enabling more bullish second-half and 2027 outlook. Growth vectors include hyperscaler wins ramping, second-wave customers ramping in 2027, and 800-volt business starting late 2027 and ramping in 2028.
Could you talk about your inventory situation and how you think about piece part inventory relative to forward demand?
We are leaning into strategic inventory to avoid constraining customers, with low obsolescence risk. We maintain high factory staffing to flex up when parts arrive late. Paul noted turns came down to 2.5x as expected, but AP/AR improvements mitigated working capital impact.
Is the second-wave customer growth to the same level as your largest hyperscaler a revenue contribution comment? What is the timeframe?
Yes, it's a revenue contribution comment. We haven't put a specific timeframe, but expect at least until 2028 or 2029 to reach that level. We have multiple wins and a strong pipeline, and we can ramp them in the Philippines and Thailand.