Advanced Energy Stock Climbs 8% After Record Quarter as AI and Chip Equipment Demand Lift Revenue 50%

Shares of Advanced Energy Industries rose more than 8% in early trading Tuesday after the power conversion company reported record third-quarter results above Wall Street's expectations. It also gave a fourth-quarter forecast ahead of analysts' estimates, citing demand from AI data centers and semiconductor manufacturers.

The Nasdaq-listed stock, which trades under the ticker AEIS, rose $17.69, or 8.14%, to $234.88 shortly after the opening bell. That gives the Denver-based company a market value of about $8.7 billion. The shares rose about 9.7% to $237.37 in after-hours trading Monday right after the results.

Record revenue

Advanced Energy reported third-quarter revenue of $696.4 million, up 50% from a year earlier and 21% from the second quarter. Analysts surveyed by Zacks Investment Research had expected $646.4 million.

Adjusted earnings were $3.65 per share, above the $3.06 per share analysts expected. On a GAAP basis, net income was $115.6 million, or $2.79 per share, up from $46.2 million a year earlier.

"We delivered record financial results again in the third quarter," said Steve Kelley, president and CEO. He said revenue grew in each of the company's markets compared with both the previous quarter and a year earlier.

Growth in every segment

Semiconductor equipment revenue rose 64% to a record $322 million. The company said the increase came from demand for leading-edge chipmaking tools.

Data center computing revenue rose 49% to a record $256 million, up 34% from the previous quarter. The company credited AI investment and earlier design wins.

Industrial and medical revenue rose 27% to $91 million, the fourth straight quarter of year-over-year growth. Telecom and networking sales rose 15%.

Margins and profit

Non-GAAP gross margin was 42.1%, and GAAP gross margin rose to 41.5% from 37.6% a year earlier. Operating income rose 118% to a record $170 million.

Fourth-quarter outlook

Advanced Energy expects fourth-quarter revenue of $710 million to $760 million and adjusted earnings of $3.60 to $4.20 per share. The midpoint of the revenue range is about 5.6% above analysts' consensus estimate, and the earnings outlook is also well above expectations.

The company now expects revenue to grow about 40% in 2026.

Cash and buybacks

Advanced Energy generated $66 million in cash flow from continuing operations during the quarter. It said it put the money into working capital to support future growth.

Cash rose to $1.42 billion. In October, after the quarter ended, the company bought back $30 million of its stock at an average price of $240.77 per share.

It paid $4.1 million in dividends during the quarter and spent $31 million on capital projects to increase factory production.

AI supply chain

Advanced Energy makes precision power conversion, measurement and control products. Its equipment is used in semiconductor manufacturing tools, data center servers and industrial and medical systems.

The company benefits from AI spending in two ways. It supplies power systems for the tools that make advanced chips, and it supplies power products for the servers that run AI workloads.

What to watch

The stock trades at about 41 times trailing earnings and is up about 11% over the past 52 weeks. Investors will watch whether data center demand stays strong, whether semiconductor equipment orders keep rising and whether the company can protect margins while it expands production.