Advanced Energy Posts Record Revenue as Chip and Data Center Demand Surge

Advanced Energy Industries reported record third-quarter revenue of $696.4 million on Monday, up 50.3 percent from a year earlier, an article calculation.

Advanced Energy Industries makes precision power conversion, measurement and control equipment. That gear powers chip-making tools, data centers and factory lines. The company is based in Denver, Colorado.

It reported results for the quarter ended September 30, 2026. The release came after the market close on Monday, November 2.

A clear beat on the single consensus frame

Analysts expected non-GAAP earnings of $3.06 per share, on the Zacks consensus frame. Advanced Energy reported non-GAAP earnings of $3.65 per share. Non-GAAP figures are the company's adjusted measures, labeled as such at every use.

Revenue beat the same frame. The Zacks revenue estimate was $646.39 million for the quarter. Advanced Energy reported $696.4 million, the release's statement shows.

Zacks put the earnings surprise at 19.28 percent. It put the revenue surprise at 7.74 percent. Both surprises are Zacks calculations on its own consensus frame.

On the standard GAAP basis, net income from continuing operations was $116 million. That is $2.80 per diluted share. A year earlier it was $46 million, or $1.21 per share.

The sequential GAAP jump needs one piece of context. Second-quarter GAAP net income from continuing operations was $55 million, or $1.29 per share. That quarter carried $32 million of inducement costs, or $0.75 per share.

Those costs came from the partial conversion of the 2028 convertible senior notes. Convertible notes are debt that can turn into shares. The release discloses the charge in its comparison text.

Non-GAAP net income was $150 million in the third quarter. That compares with $112 million in the second quarter. A year earlier it was $66 million, the release's reconciliation shows.

Chip tools and data centers set records

Semiconductor Equipment revenue was $322.2 million in the quarter. That is up about 64 percent from $196.6 million a year earlier. The segment reached a record level, the release says.

Data Center Computing revenue was $256.2 million, also a record. That is up about 49 percent from $171.6 million a year earlier. The two growth markets supplied most of the quarter's revenue.

“We delivered record financial results again in the third quarter, with revenue in each of our markets growing sequentially and year-over-year,” said Steve Kelley, president and CEO of Advanced Energy.

Industrial and Medical revenue was $90.5 million in the quarter. Telecom and Networking revenue was $27.5 million. Both smaller markets also grew from a year earlier, the segment table shows.

Kelley said the Thailand factory ramp is on track. He also expects growing revenue contribution from new products in 2027. He said the company is positioned to gain share and outgrow its markets.

Margins widened as revenue climbed

GAAP gross margin was 41.5 percent in the quarter. Non-GAAP gross margin was 42.1 percent, a company-adjusted measure. Gross margin is the share of revenue left after production costs.

A year earlier, GAAP gross margin was 37.6 percent. Non-GAAP gross margin was 39.1 percent a year earlier. In the second quarter, GAAP gross margin was 41.1 percent.

The non-GAAP margin gain is 3.0 percentage points from a year earlier, an article calculation. That is 300 basis points, derived from the release's own margin table. A basis point is one-hundredth of a percentage point.

Cash flow, dividends and an October buyback

Cash flow from continuing operations was $66 million in the quarter. The company paid $4 million in quarterly dividends. Both figures are the release's quarterly narrative figures, stated as such.

After the quarter ended, the company repurchased $30 million of its common stock. The repurchases happened in October, at an average price of $240.77 per share. That is a fourth-quarter event, not a third-quarter result.

Fourth-quarter guidance points higher

For the fourth quarter, the company guided revenue to $735 million, plus or minus $25 million. That range runs from $710 million to $760 million. Guidance is the company's expectation for work not yet done, not a result.

GAAP earnings from continuing operations are guided to $3.30 per diluted share, plus or minus $0.30. Non-GAAP earnings are guided to $3.90 per share, plus or minus $0.30. The release gives no fourth-quarter gross-margin guidance.

What remains unknown

What remains unknown starts with demand durability. The release does not say how much of the data center surge is repeatable orders. It also does not break out orders or backlog for the quarter.

The release states no full-year revenue outlook beyond the fourth-quarter guide. Whether the Thailand ramp lifts margins further is also unstated. Tariff and export-control effects are named as risks, not quantified.

What to watch next

What to watch next starts with fourth-quarter delivery against the guide. Revenue inside the $710 million to $760 million range would confirm the trajectory. The segment split will show whether data center demand held its record pace.

Then watch the new products Kelley flagged for 2027. Their revenue contribution is the next test management named in the release. Management scheduled its earnings call for 4:30 p.m. Eastern Time on Monday, November 2.