Advanced Energy Industries AEIS reported non-GAAP earnings of $1.23 per share in the first quarter of 2025, beating the Zacks Consensus Estimate by 18.27%. The bottom line jumped 112.1% on a year-over-year basis. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Revenues of $404.6 million beat the Zacks Consensus Estimate by 5.1% and increased 23.5% year over year, primarily due to growth in new data center programs and continued strength in semiconductor.

The top-line growth was up 5.1% sequentially, led by strength in Semiconductor and Data Center Computing.

AEIS’ End Market in Detail

Semiconductor Equipment: Revenues (54.9% of total revenues) generated from the market rose 23.5% year over year to $222.20 million. The figure topped the Zacks Consensus Estimate by 0.96%.

AEIS saw accelerating demand for its next-generation eVoS, eVerest, and NavX products, with over 350 qualification units shipped through the first quarter. This marked a fivefold increase year over year and a notable rise from more than 250 units shipped in the prior quarter, reflecting strong customer pull and growing momentum across its target markets.

Industrial & Medical: Revenues (15.9% of the total revenues) from the market fell 22.9% year over year to $64.30 million and lagged the Zacks Consensus Estimate by 18.60%.

Sequentially, revenues declined 16.3%. The decline can be attributed to ongoing channel inventory reduction and lower turns revenues.

AEIS recorded major wins in industrial coating, robotics, therapeutic, and life science applications.

Data Center Computing: Revenues (23.8% of the total revenues) from the market were $96.2 million, up 129.6% year over year. The figure beat the consensus mark by 67.99%. 

Sequentially, revenues increased 8.5%. The upside can be attributed to multiple new hyperscale programs that started to ramp up during the quarter.

Telecom & Networking: Revenues (5.4% of the total revenues) generated from the market were $21.9 million, down 1.8% year over year. The figure beat the Zacks Consensus Estimate by 5.49%. 

Sequentially, revenues declined 5.2%.

AEIS’ Operating Results

In the first quarter, the non-GAAP gross margin was 37.9%, up 280 basis points (bps) on a year-over-year basis.

Non-GAAP operating expenses were $98.6 million, up 5.3% year over year. As a percentage of revenues, the figure declined 420 bps year over year to 24.4% in the reported quarter.

The non-GAAP operating margin was 14.6%, expanding 940 bps on a year-over-year basis.

AEIS’ Balance Sheet & Cash Flow

As of March 31, 2025, cash and cash equivalents were $723 million compared with $722 million as of Dec. 31, 2024.

In the first quarter of 2025, cash flow from operations was $29.2 million, down from $82.7 million in the fourth quarter of 2024.

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

AEIS Initiates Q2 Guidance

For second-quarter 2025, Advanced Energy expects non-GAAP earnings of $1.30 per share (+/- 25 cents).

Advanced Energy anticipates revenues of $420 million (+/- $20 million).

Conclusion

Despite strong demand in the semiconductor and data center markets, weakness across the Industrial, Medical and Telecom sectors may hurt AEIS’ top line.

The company’s shares have lost 13.5% in the year-to-date period compared with the Zacks Computer & Technology sector’s decline of 10.8%.

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.

Stocks to Consider

StoneCo STNE, Paycom Software PAYC and Affirm AFRM are some better-ranked stocks that investors can consider in the broader sector. Each stock presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

StoneCo shares have surged 76.2% year to date. STNE is set to report its first-quarter 2025 results on May 8.

Paycom Software shares are up 10.1% year to date. PAYC is slated to report its first-quarter 2025 results on May 7.

Affirm shares have plunged 17.4% year to date. AFRM is scheduled to report its fourth-quarter fiscal 2025 results on May 8.

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