Advanced Energy Industries, Inc. (AEIS) | Investment Case

1. Company Snapshot

1.a. Company Description

Advanced 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.

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1.b. Last Insights on AEIS

Advanced Energy Industries' recent performance was driven by strong Q3 earnings, beating estimates with $1.74 per share, up 78% year-over-year. Robust data center growth fueled the surge. The company raised its 2025 revenue outlook, citing solid demand. Earnings estimate revisions have been upwardly revised, indicating potential for further growth. Additionally, institutional investors, such as US Bancorp DE, have increased their stake in the company. AI-driven semiconductor sales growth also bodes well for the company's prospects.

1.c. Company Highlights

Last Price	219.38
Change Percentage	2.20%
Open	214.17
Previous Close	214.65
Market Cap ( Millions)	8281
Volume	336398
Year High	232.05
Year Low	75.01
M A 50	196.01
M A 200	143.29

FCF Yield	1.87%
Dividend Yield	0.18%
ROE	11.60%
Debt / Equity	8.87%
Net Debt / EBIDTA	-336.87%
Price To Book	6.31
Price Earnings Ratio	56.9
Price To FCF	53.55
Price To sales	4.8
EV / EBITDA	40.04

2. Advanced Energy's Q3 2025 Earnings: A Strong Performance

Advanced Energy's third-quarter revenue and earnings exceeded the high end of guidance, driven by record data center revenue, which more than doubled year-on-year. Total company revenue increased 24% from last year, to $463 million, while gross margin was 39.1%, up 280 basis points over last year. Earnings per share (EPS) came in at $1.74, beating estimates of $1.47. The company's diversification strategy is working, with different business cycles mitigating industry risks and enabling more consistent revenue growth, profits, and cash flow.

Publication Date: Nov -11

                                    📋 Highlights
                                    Q3 Revenue & EPS Outperformed Guidance:
                                                Revenue hit $463M (+24% YoY), with data center revenue surging 113% YoY to $172M, surpassing the high end of guidance. EPS delivered the second-highest quarterly performance in history.
24% YoY Growth in Total Revenue:
                                                Fourth consecutive quarter of year-over-year growth, driven by semiconductor, data center, and industrial/medical markets, with data center computing revenue doubling year-on-year.
Gross Margin Expansion:
                                                Q3 gross margin rose to 39.1% (+280 bps YoY), with 2026 guidance targeting 40%+ margins, aiming for a long-term goal of 43% despite tariff headwinds.
2026 Data Center Growth Projections:
                                                Anticipates 25-30% growth in data center revenue, fueled by new customer designs and next-gen products, with Thailand facility ramping to support capacity and cost efficiency.
Market Diversification Strategy:
                                                Leveraging three asynchronous markets (semiconductor, data center, industrial/medical) to stabilize revenue, with semiconductor expected to grow 5-7% in 2026 and industrial/medical benefiting from design wins.

                                

Revenue Growth Drivers

The data center computing segment was a significant contributor to revenue growth, with revenue increasing 113% year-over-year and 21% quarter-over-quarter to $172 million. Semiconductor market revenue was about flat year-over-year but down 6% sequentially. The company's industrial and medical (I&M) segment is expected to benefit from the design win pipeline and ongoing market recovery.

Guidance and Outlook

The company expects fourth-quarter total revenue to increase sequentially to approximately $470 million, plus or minus $20 million. Gross margin in the fourth quarter is expected to be between 39% to 40%. For 2026, the company expects data center business growth of 25% to 30%, representing a sustainable level with opportunities to grow faster. Semiconductor growth is expected to be mid-single-digit in 2025, with optimism about 2026 due to new products and positive movements in leading-edge logic and memory markets.

Valuation Metrics

Advanced Energy's current valuation metrics indicate a price-to-earnings (P/E) ratio of 56.88, price-to-book (P/B) ratio of 6.31, and price-to-sales (P/S) ratio of 4.8. The EV/EBITDA ratio is 40.02. Analysts estimate next year's revenue growth at 11.8%. The company's return on equity (ROE) is 11.6%, and return on invested capital (ROIC) is 7.29%. The net debt to EBITDA ratio is -3.37, indicating a healthy financial position.

Future Prospects

The company's priorities for M&A remain focused on the industrial medical area, as it's highly fragmented and offers opportunities for a partial roll-up. The new factory in Thailand is expected to start shipping products soon, which will help absorb fixed costs. The company is well-positioned to deliver growth in each of its targeted markets in 2026, driven by its diversification strategy and investments in new technology, products, infrastructure, and production capacity.

3. NewsRoom

Fisher Asset Management LLC Buys 122,094 Shares of Advanced Energy Industries, Inc. $AEIS

Dec -03

Source: defenseworld.net

Is Advanced Energy Industries (AEIS) Stock Outpacing Its Computer and Technology Peers This Year?

Nov -12

Source: zacks.com

Will Advanced Energy (AEIS) Gain on Rising Earnings Estimates?

Nov -11

Source: zacks.com

AI Optimism Powers Semiconductor Sales: 5 Stocks to Buy Now

Nov -10

Source: zacks.com

Advanced Energy Industries Q3 Earnings Beat Estimates, Revenues Up Y/Y

Nov -05

Source: zacks.com

Advanced Energy (AEIS) Q3 Earnings: Taking a Look at Key Metrics Versus Estimates

Nov -05

Source: zacks.com

Advanced Energy Industries, Inc. (AEIS) Q3 2025 Earnings Call Transcript

Nov -05

Source: seekingalpha.com

Advanced Energy Industries (AEIS) Beats Q3 Earnings and Revenue Estimates

Nov -04

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.24%)

6. Segments

Semiconductor Equipment

Expected Growth: 8%

Advanced Energy Industries, Inc.'s Semiconductor Equipment segment growth is driven by increasing demand for 5G and IoT devices, rising adoption of artificial intelligence and machine learning, and growing need for advanced semiconductor manufacturing technologies. Additionally, the company's strong relationships with leading chipmakers and its innovative product portfolio contribute to its 8% growth.

Industrial and Medical

Expected Growth: 6%

Advanced Energy Industries, Inc.'s Industrial and Medical segment growth is driven by increasing demand for plasma etch and deposition technologies in semiconductor manufacturing, as well as growing adoption of medical devices and equipment. Additionally, the company's focus on innovation and R&D investments in these areas has contributed to its 6% growth rate.

Data Center Computing

Expected Growth: 9%

Advanced Energy Industries' Data Center Computing segment growth is driven by increasing demand for cloud computing, artificial intelligence, and 5G networks, leading to higher server shipments and rising need for power management and thermal management solutions. Additionally, the shift towards hybrid and edge computing is fueling growth, as data centers require more efficient and reliable power solutions.

Telecom and Networking

Expected Growth: 5%

Advanced Energy Industries, Inc.'s Telecom and Networking segment growth is driven by increasing demand for 5G infrastructure, rising adoption of IoT devices, and growing need for high-speed data transmission. Additionally, the shift towards remote work and virtual communication is fueling growth in this segment, with a 5% growth rate.

7. Detailed Products

Power Supplies

Advanced Energy's power supplies provide high-voltage, high-current, and high-frequency power conversion solutions for plasma-based applications.

Radio Frequency (RF) Generators

Advanced Energy's RF generators provide high-power, high-frequency energy for plasma-based applications.

Matching Networks

Advanced Energy's matching networks provide impedance matching solutions for plasma-based applications.

Sputtering Sources

Advanced Energy's sputtering sources provide high-performance, high-reliability sputtering solutions for thin film deposition applications.

Thermal Instrumentation

Advanced Energy's thermal instrumentation provides temperature measurement and control solutions for industrial applications.

Gas Flow Control

Advanced Energy's gas flow control solutions provide precise gas flow control and measurement for industrial applications.

8. Advanced Energy Industries, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Advanced Energy Industries, Inc. is medium due to the availability of alternative energy sources and technologies.

Bargaining Power Of Customers

The bargaining power of customers for Advanced Energy Industries, Inc. is low due to the company's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Advanced Energy Industries, Inc. is medium due to the company's dependence on a few key suppliers for critical components.

Threat Of New Entrants

The threat of new entrants for Advanced Energy Industries, Inc. is high due to the growing demand for renewable energy solutions and the increasing number of new entrants in the market.

Intensity Of Rivalry

The intensity of rivalry for Advanced Energy Industries, Inc. is high due to the competitive nature of the industry and the presence of established players.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	44.93%
Debt Cost	3.95%
Equity Weight	55.07%
Equity Cost	11.63%
WACC	8.18%
Leverage	81.58%

11. Quality Control: Advanced Energy Industries, Inc. passed 5 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

EnerSys

A-Score: 5.2/10

Value: 4.4

Growth: 6.2

Quality: 5.7

Yield: 2.0

Momentum: 6.5

Volatility: 6.3

1-Year Total Return ->

Acuity Brands

A-Score: 5.2/10

Value: 2.8

Growth: 6.8

Quality: 7.0

Yield: 0.0

Momentum: 7.0

Volatility: 7.3

1-Year Total Return ->

Hubbell

A-Score: 5.1/10

Value: 2.0

Growth: 6.8

Quality: 7.2

Yield: 3.0

Momentum: 4.0

Volatility: 7.7

1-Year Total Return ->

Atkore

A-Score: 4.6/10

Value: 6.1

Growth: 8.0

Quality: 4.8

Yield: 2.0

Momentum: 2.5

Volatility: 4.0

1-Year Total Return ->

Hayward Holdings

A-Score: 4.3/10

Value: 3.6

Growth: 3.2

Quality: 7.4

Yield: 0.0

Momentum: 5.0

Volatility: 6.3

1-Year Total Return ->

Advanced Energy Industries

A-Score: 4.1/10

Value: 0.6

Growth: 4.9

Quality: 5.3

Yield: 0.0

Momentum: 9.0

Volatility: 5.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

21.60%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.18%

Advanced Energy Industries, Inc. - US0079731008

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on AEIS

1.c. Company Highlights

Expensive

Stable Momentum

Average Yield

Earnings Miss

Revenues Miss

Earnings Beats

Revenues Beats

Higher Growth

Average Growth

Medium Volatility

Strong Momentum

2. Advanced Energy's Q3 2025 Earnings: A Strong Performance

Revenue Growth Drivers

Guidance and Outlook

Valuation Metrics

Future Prospects

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.24%)

6. Segments

Semiconductor Equipment

Expected Growth: 8%

Industrial and Medical

Expected Growth: 6%

Data Center Computing

Expected Growth: 9%

Telecom and Networking

Expected Growth: 5%

7. Detailed Products

Power Supplies

Radio Frequency (RF) Generators

Matching Networks

Sputtering Sources

Thermal Instrumentation

Gas Flow Control

8. Advanced Energy Industries, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Advanced Energy Industries, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

219.38$

Current Price

219.38$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA