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Advanced Energy (AEIS)
NASDAQ:AEIS
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Advanced Energy
(NASDAQ:AEIS)
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Rating:74Outperform
Price Target:
$313.00
▼(-6.77% Downside)
Action:ReiteratedDate:02/12/26
AEIS scores well on improving fundamentals and a strong, established uptrend, reinforced by upbeat guidance and data-center momentum from the latest earnings call. The overall score is held back primarily by expensive valuation (high P/E, low yield) and secondarily by softer free-cash-flow trends and working-capital/inventory considerations.
Positive Factors
Data-center momentum & design wins
Extraordinary data-center growth and multiple confirmed design wins materially diversify revenue toward a high-growth, higher-margin end market. Record and ramping data-center programs provide durable multi-year demand visibility and stronger product stickiness as capacity scales.
Sustained margin expansion
Gross margin improvement nearing 40% with management targeting >40% reflects structural mix shift to higher-margin data-center and semiconductor products plus footprint optimization. As volumes scale, fixed-cost absorption and improved mix can sustainably lift operating margins over coming years.
Stronger liquidity & leverage
Robust operating cash flow, a net-cash position and materially improved leverage provide financial flexibility to fund capacity buildouts, R&D and strategic inventory without near-term refinancing. This balance sheet strength supports multi-year execution of growth plans and risk absorption.
Negative Factors
Weaker free cash flow conversion
A meaningful decline in free cash flow and only moderate cash conversion versus accounting profits reduces internal funding for capex, inventory and shareholder returns. If conversion remains weak, the company may need to draw on cash reserves or slow investments, constraining durable growth execution.
Elevated inventory & working capital
High inventory days and low turns tie up capital and depress capital efficiency as the company ramps capacity. Persistently elevated working capital increases financing needs, raises vulnerability to demand swings, and can compress returns until ramps normalize and turns improve.
Supply constraints and tariff risk
Ongoing processor/memory supply limits and tariff headwinds can cap achievable ramp rates and force strategic inventory or pricier sourcing. These structural supply-side constraints raise execution risk, delay customer ramps, and can pressure margins and growth visibility over the medium term.
Advanced Energy (AEIS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.67B
Dividend Yield0.18%
Average Volume (3M)843.33K
Price to Earnings (P/E)85.6
Beta (1Y)1.77
Revenue Growth17.18%
EPS Growth235.76%
CountryUS
Employees10,000
SectorIndustrials
Sector Strength72
IndustryElectrical Equipment & Parts
Share Statistics
EPS (TTM)1.94
Shares Outstanding37,750,990
10 Day Avg. Volume763,161
30 Day Avg. Volume843,331
Financial Highlights & Ratios
PEG Ratio0.31
Price to Book (P/B)5.78
Price to Sales (P/S)4.38
P/FCF Ratio62.53
Enterprise Value/Market Cap0.99
Enterprise Value/Revenue6.98
Enterprise Value/Gross Profit18.29
Enterprise Value/Ebitda54.79
Forecast
1Y Price Target
$310.00Price Target Upside-7.67% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering10
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Advanced Energy Business Overview & Revenue Model
Company DescriptionAdvanced Energy Industries, Inc. designs, manufactures, sells, and supports precision power conversion, measurement, and control solutions worldwide. It offers plasma power solutions, including direct current (DC), pulsed DC, low frequency alternating current, high voltage, and radio frequency (RF) power supplies, as well as RF power supplies, RF matching networks, and RF instrumentation products; and remote plasma sources for reactive gas applications. The company also provides power control modules and thermal instrumentation products for rapid thermal processing, chemical vapor deposition, epitaxy, crystal growing, and chemical processing, as well as metal, carbon fiber, and glass manufacturing and other industrial power applications; high voltage DC-DC products for semiconductor wafer processing and metrology, electrostatic clamping of substrates, scientific instrumentation, mass spectrometry, and X-ray systems for industrial and analytical applications; and low voltage DC-DC board mounted solutions for use in healthcare, telecommunications, test and measurement, instrumentation, and industrial equipment applications, as well as distributed power in server and storage systems. In addition, it offers gas sensing and monitoring products for the energy market, air quality monitoring, and automobile emission monitoring and testing; and embedded power products for medical equipment or IEC 60950-1 for information technology equipment. Further, it offers conversions, upgrades, and refurbishments and used equipment to companies, as well as repair services. The company provides its products through a direct sales force, independent sales representatives, channel partners, and distributors. Advanced Energy Industries, Inc. was incorporated in 1981 and is headquartered in Denver, Colorado.
How the Company Makes MoneyAdvanced Energy generates revenue primarily through the sale of its core products, which include high-performance power supplies, thermal management solutions, and advanced measurement instruments. The company serves a diverse customer base, including semiconductor manufacturers, industrial equipment producers, and renewable energy developers. Key revenue streams come from the sale of equipment and components, as well as ongoing services such as installation, maintenance, and technical support. Additionally, AEIS benefits from strategic partnerships with leading technology firms and collaborative projects that enhance its market reach and product offerings, contributing to its earnings growth.
Advanced Energy Key Performance Indicators (KPIs)
Any
Revenue by Category
Breaks down revenue by product or service categories, revealing which areas are driving growth and which may need strategic adjustments to enhance performance.
Breaks down revenue by product or service categories, revealing which areas are driving growth and which may need strategic adjustments to enhance performance.
Data provided by:
The Fly
The FlyAdvanced Energy Earnings Call Summary
Earnings Call Date:Feb 10, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 06, 2026
Earnings Call Sentiment Positive
The call was broadly positive: the company reported strong top-line growth (21% revenue growth for 2025), exceptional data center momentum, meaningful margin expansion, record operating cash flow, and material capacity investments with clear product and design-win momentum. Notable challenges include a full-year decline in industrial & medical, ongoing tariff headwinds, and supply-chain constraints (processors and memory) that could limit near-term upside and create conservatism in guidance. Management provided constructive 2026 targets (high-teens revenue growth, data center >30%, gross margin approaching/above 40%) while acknowledging risks and planned strategic inventory and capacity investments to mitigate supply constraints.Q4-2025 Updates
Positive Updates
Strong Q4 Revenue and Beat vs Guidance
Q4 revenue of $489M (reported as nearly $490M) was at the high end of guidance, up 6% sequentially and 18% year-over-year.
Record Data Center Performance
Data center Q4 revenue reached a record $178M, up 4% sequentially and 101% year-over-year; full-year 2025 data center revenue was reported at $587M, an increase of 1007% year-over-year per the transcript.
Solid Semiconductor Results
Semiconductor Q4 revenue was $212M, up 8% sequentially and ahead of guidance; full-year semiconductor revenue reached $840M, up 6% year-over-year and the company's second-highest year on record.
Material Margin Improvement
Q4 gross margin was 39.7% (best in five years), full-year gross margin improved to 38.7% (up ~240 basis points year-over-year), and management expects to move above 40% in 2026 with a long-term goal of 43%.
Operating Profit and EPS Expansion
Q4 operating margin was 17.8% (up 100 bps sequentially and 430 bps year-over-year). Full-year operating margin improved to 15.8% (up 560 bps). Q4 non-GAAP EPS was $1.94 (up from $1.74 Q3 and $1.30 a year ago); full-year non-GAAP EPS was $6.41, up 73%.
Record Cash Flow and Strong Balance Sheet
Record operating cash flow of $235M for 2025; Q4 cash flow from continuing operations was $80M. Total cash increased to $791M with net cash of $224M.
Capacity Expansion and Manufacturing Footprint Optimization
Doubled output/capacity in Philippines and Mexico, completed Thailand factory fit-up (expected to deliver >$1B of annual revenue-generating capacity when built out), and exited remaining China factory to optimize footprint.
Product and Design-Win Momentum
26 new product launches in 2025, multiple confirmed design wins across semiconductor (Everest, EVOS, NavX adoption) and data center (AI rack applications) with several programs ramping to volume in 2026.
Raised Data Center Growth Outlook & 2026 Guidance
Management raised 2026 data center revenue growth outlook to >30% (from 25-30%) and projects 2026 revenue growth in the high teens overall. Q1 2026 revenue guide is ~$500M ± $20M with Q1 non-GAAP EPS ~ $1.94 ± $0.25.
Capital Discipline and Investment
FY 2025 CapEx was $107M (6% of revenue) to support capacity expansion; Q4 CapEx $38M. Management expects 2026 CapEx at or around Q4 levels to enable >$2.5B capacity in existing footprint plus Thailand build-out.
Negative Updates
Industrial & Medical Full-Year Decline
Industrial and medical revenue decreased 11% for full-year 2025 despite sequential recovery during the year; although Q4 I&M was $78M (+10% sequential, +2% YoY), the segment experienced a prolonged inventory correction.
Supply Chain Constraints Risking Near-Term Growth
Management flagged processor (GPUs/ASICs) and memory constraints as limiting factors for 2026 growth, prompting conservative assumptions and strategic inventory build; these allocations could cap ramp rates even with strong demand.
Tariff Headwinds and Gross Margin Pressure
Ongoing tariff impacts were called out (management noted they kept tariff impact on gross margin to less than 100 bps in 2025) and remain a headwind to margin improvement.
Telecom & Networking Weakness
Telecom and networking revenue was $22M in Q4, down slightly for the quarter and the year due to program timing.
Operational Cost Build and OpEx Run-Rate Increase
Operating expenses increased to $107M in Q4 (up 4% QoQ). Management expects OpEx to grow through 2026 toward a ~ $120M quarterly run rate and total OpEx in the $450M–$460M range as investments (including Thailand) come online.
Inventory & Working Capital Considerations
Inventory days were 125 with turns of 2.9; management expects inventory to increase to support anticipated ramps and strategic supply, which could temporarily depress turns/working capital efficiency.
Visibility & Timing Uncertainty on Second-Wave Data Center Customers
While management expects upside from second-wave cloud/enterprise customers, they did not include these in the >30% data center growth outlook due to limited visibility and potential timing/program constraints.
Convertible Note Dilution & Share Count Assumption
Non-GAAP EPS guidance incorporates 39.7M shares to account for dilution from the company's convertible note, reflecting a potential recurring dilution consideration.
Company Guidance
Management guided Q1 revenue of approximately $500 million ± $20 million, gross margin around 39.5%–40%, Q1 non‑GAAP EPS about $1.94 ± $0.25 (based on 39.7 million shares due to the convertible note), a normalized tax rate of ~16%–17%, other income near $1 million, and flattish operating expenses with CapEx expected to remain around Q4 run‑rate levels; for full‑year 2026 they model high‑teens revenue growth with data‑center revenue growth revised to >30%, expect to move gross margin above 40% in 2026 (long‑term target 43%), and plan 2026 CapEx to support >$2.5 billion of revenue‑generating capacity (Thailand ultimately adding >$1 billion). Management also reiterated recent 2025 and Q4 metrics underpinning the outlook: FY2025 revenue $1.8 billion (+21% YoY) and record operating cash flow $235 million (Q4 CFFO $80M); Q4 revenue $489M (+6% sequential, +18% YoY), Q4 gross margin 39.7% (+60 bps QoQ), Q4 operating margin 17.8%, Q4 adjusted EBITDA $97M, FY adjusted EBITDA $324M, FY non‑GAAP EPS $6.41 (+73%), cash $791M (net cash $224M), inventory days 125 (turns 2.9), DSO 60, DPO 68, net working capital 117 days, 2025 CapEx $107M (6% of revenue), Q4 CapEx $38M, Q4 dividends $4M and $6.7M of buybacks (33k shares at $205.38).Advanced Energy Financial Statement Overview
Summary
Financials are improving, led by a TTM revenue rebound (+4.29%) and higher profitability versus 2024, plus a healthier balance sheet (debt-to-equity ~0.43, ROE ~11.5%). The main constraint is cash-flow quality: free cash flow is positive but down ~16.6% and conversion is only moderate (~54% of net income).Income Statement
TTM (Trailing-Twelve-Months) revenue rebounded to $1.80B with 4.29% growth after declines in 2023–2024, showing demand is stabilizing. Profitability has improved versus 2024 (net margin ~8.25% vs ~3.66%), but remains below 2021–2022 levels (net margin ~9%–11%), indicating margins have not fully recovered. Overall, earnings momentum is positive, but the multi-year volatility and still-lower peak margins keep the score short of top-tier.72
Positive
Balance Sheet
Leverage looks reasonable in TTM (Trailing-Twelve-Months) with debt-to-equity at ~0.43, improved from 2023 (~0.89) and modestly better than 2024 (~0.56), suggesting a healthier capital structure. Equity has grown to $1.36B with total assets at $2.55B, supporting balance sheet resilience. Returns on equity improved to ~11.5% TTM (Trailing-Twelve-Months) from ~4.5% in 2024, though still below 2022 (~18.7%), implying profitability and efficiency are recovering but not back to prior highs.78
Positive
Cash Flow
TTM (Trailing-Twelve-Months) operating cash flow is solid at $233.3M and free cash flow remains positive at $125.9M, but free cash flow fell ~16.6% versus the prior period, signaling weaker conversion recently. Cash generation relative to accounting profits is moderate (free cash flow is ~54% of net income TTM), which is adequate but not strong. The combination of positive cash flow yet declining free cash flow and only mid-level conversion drives a more cautious score.63
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.80B | 1.48B | 1.66B | 1.85B | 1.46B |
| Gross Profit | 670.00M | 529.34M | 592.40M | 675.51M | 532.32M |
| EBITDA | 257.20M | 145.94M | 205.56M | 309.36M | 205.18M |
| Net Income | 148.40M | 54.21M | 128.28M | 199.66M | 134.74M |
Balance Sheet | |||||
| Total Assets | 2.55B | 2.26B | 2.56B | 1.99B | 1.82B |
| Cash, Cash Equivalents and Short-Term Investments | 791.20M | 722.09M | 1.04B | 458.82M | 544.37M |
| Total Debt | 679.00M | 671.70M | 1.02B | 484.49M | 503.76M |
| Total Liabilities | 1.18B | 1.06B | 1.41B | 925.90M | 945.84M |
| Stockholders Equity | 1.36B | 1.20B | 1.14B | 1.07B | 870.85M |
Cash Flow | |||||
| Free Cash Flow | 125.90M | 73.96M | 147.93M | 124.70M | 108.37M |
| Operating Cash Flow | 233.30M | 130.75M | 208.94M | 183.59M | 140.25M |
| Investing Cash Flow | -109.80M | -73.54M | -64.75M | -208.27M | -47.30M |
| Financing Cash Flow | -56.10M | -377.09M | 445.68M | -61.87M | -25.37M |
Advanced Energy Technical Analysis
Positive
335.74
Price Trends
249.18
Positive
223.63
Positive
181.27
Positive
Market Momentum
21.98
Negative
79.64
Negative
91.66
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AEIS, the sentiment is Positive. The current price of 335.74 is above the 20-day moving average (MA) of 283.24, above the 50-day MA of 249.18, and above the 200-day MA of 181.27, indicating a bullish trend. The MACD of 21.98 indicates Negative momentum. The RSI at 79.64 is Negative, neither overbought nor oversold. The STOCH value of 91.66 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AEIS.
Advanced Energy Risk Analysis
Advanced Energy disclosed 38 risk factors in its most recent earnings report. Advanced Energy reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Advanced Energy Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $6.79B | 35.35 | 32.16% | 0.32% | 9.08% | 19.86% | |
77 Outperform | $6.36B | 20.72 | 16.74% | 0.67% | 6.17% | 20.86% | |
77 Outperform | $19.12B | 44.15 | 12.30% | 0.84% | 5.31% | 5.76% | |
77 Outperform | $93.05B | 71.29 | 41.81% | 0.11% | 28.76% | 76.31% | |
74 Outperform | $12.67B | 85.64 | 11.64% | 0.18% | 17.18% | 235.76% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
54 Neutral | $1.28B | ― | -68.95% | ― | 45.98% | 44.14% |
* Industrials Sector Average
AEIS
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214.52
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.