Advanced Energy Industries (AEIS) Morgan Stanley Technology, Media & Telecom Conference 2026 summary

Industry environment and growth outlook

• Data center market grew faster than expected, more than doubling last year due to new products and focused strategy.

• Semiconductor segment experienced its second consecutive year of growth, with expectations for continued momentum, especially in the second half of the year and into next year.

• Industrial and medical markets rebounded after a tough start, with sequential growth and normalization, expected to grow steadily with macroeconomic health.

• Achieved 21% revenue growth last year, guiding for high teens growth this year, with potential upside depending on market conditions.

• Positioned to potentially reach $2.5 billion in revenue earlier than 2030, possibly by 2027.

Financial performance and margin outlook

• Gross margin improved from 35% at the start of 2024 to nearly 40% by the end of 2025, with further gains expected from new products and portfolio mix.

• Tariffs present a 100 basis point headwind, but data center mix and manufacturing consolidation support margin improvement.

• Operating expenses are growing at half the rate of revenue, with no need for major new investments to reach $2.5 billion revenue.

• Earnings growth is expected to outpace the original plan due to strong performance and efficient cost management.

Capital expenditure and capacity expansion

• CapEx for 2026 will remain at Q4 run rate, supporting $2.5 billion revenue capacity.

• Capacity investments are being pulled forward, especially for data centers, with new sites like the Philippines and Thailand coming online earlier than planned.

• Thailand facility will be incremental to current capacity, likely opening in early 2027, initially serving data center customers and potentially semiconductor as well.