Advanced Energy Industries AEIS reported fourth-quarter 2024 non-GAAP earnings of $1.30 per share, surpassing the mid-point of its guidance and beating the Zacks Consensus Estimate by 19.27%. The bottom line rose 4.8% year over year.

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Revenues of $415.4 million beat the Zacks Consensus Estimate by 6.45% and grew 2.5% year over year, driven by increased semiconductor demand and strength in data center computing.

AEIS expects data center demand to remain strong following continued growth in the second half. Semiconductor revenues also increased throughout the year as the company leveraged various upside opportunities.

Following the satisfactory financial results, AEIS shares gained 7.93% in the pre-market trading on Feb. 12.

AEIS’s End Market Details

Semiconductor Equipment: Revenues (54.6% of total revenues) from the market rose 18.5% year over year to $226.8 million. The figure topped the Zacks Consensus Estimate by 12.29%.

Sequentially, revenues grew 15% year over year, driven by stronger year-end demand across multiple customers. New product shipments were robust, supported by evaluation and qualification activities for EVOS, eVerest and NavX products. By the end of last year, more than 250 qualification units had been shipped, with strong demand continuing into this year.

Industrial & Medical: Revenues (18.5% of the total revenues) from the market fell 29.3% year over year to $76.8 million and lagged the Zacks Consensus Estimate by 2.81%.

Revenues were flat sequentially, affected by weak demand and high inventory levels at both distributors and end customers. However, new product and design win activities remained strong, with 12 I&M products introduced, including configurable power supplies. Additionally, AEIS launched a program with Sager to expedite prototype delivery.

Data Center Computing: Revenues (21.3% of the total revenues) from the market were $88.7 million, up 41.1% year over year. The figure surpassed the consensus mark by 5.86%.

Sequentially, revenues increased 10%, driven by strength in hyperscale demand and the ramp-up of new high-power product production, with momentum expected to continue into 2025.

Telecom & Networking: Revenues (5.6% of the total revenues) generated from the market were $23.1 million, down 45.6% year over year. The figure missed the Zacks Consensus Estimate by 3.90%.

However, on a sequential basis, revenues increased 20%, driven by the ramp-up of a program that had been delayed from the third quarter of 2024.

AEIS’s Operating Results

In the fourth quarter, the non-GAAP gross margin was 38%, up 230 basis points (bps) on a year-over-year basis.

Non-GAAP operating expenses were $101.8 million, up 7.3% year over year. As a percentage of revenues, the figure increased 110 bps year over year to 24.5% in the reported quarter.

The non-GAAP operating margin was 13.5%, expanding 120 bps on a year-over-year basis.

AEIS’ Balance Sheet & Cash Flow

As of Dec. 31, 2024, cash and cash equivalents were $7.22 billion compared with $6.57 million as of Sept. 30, 2024.

In the fourth quarter of 2024, cash flow from operations was $82.7 million, up from $35.4 million in the third quarter of 2024.

Advanced Energy made dividend payments of $3.8 million in the reported quarter.

AEIS Initiates Q1 Guidance

The company expects guidance to remain well above that reported last year and surpass prior expectations, driven by strong semiconductor and data center demand, along with seasonal trends, despite a sequential dip.

For first-quarter 2025, Advanced Energy expects non-GAAP earnings of $1.03 per share (+/- 25 cents).

The company anticipates revenues of $392 million (+/- $20 million).

Zacks Rank & Stocks to Consider

Advanced Energy currently carries a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock.

Shutterstock SSTK, Grid Dynamics GDYN and Twilio TWLO are some better-ranked stocks that investors can consider in the broader sector. These three companies presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shutterstock shares have fallen 2.9% year to date. SSTK is set to report its fourth-quarter 2024 results on Feb. 25.

Grid Dynamics shares have gained 2.2% year to date. GDYN is set to report its fourth-quarter 2024 results on Feb. 20.

Twilio shares have risen 33.8% year to date. TWLO is set to report fourth-quarter 2024 results on Feb. 13.

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