Nov 2, 2026 earnings call — Record quarter and Thailand factory ramp
Company reported record Q3 revenue of $696 million and raised 2026 growth outlook to around 40%.
Revenue $0.7B (est $0.6B) · EPS $3.65 (est $3.04)
Key quotes
"Our new flagship factory in Thailand is beginning to generate revenue. Multiple data center customers have already qualified the factory and semiconductor customers are expected to follow shortly."
"During the quarter, we won several plasma power designs for advanced node processes, the culmination of multiyear design efforts."
"As a result, we have increased our 2026 growth outlook to around 40%."
Analyst Q&A 10
Semi and data center 2027 growth
Q (Sreekrishnan Sankarnarayanan · TD Cowen): The analyst asked if Q4 semi and data center growth estimates were in the right range and asked for any quantification of 2027 growth for those markets.
A: Paul said the Q4 sequential numbers are in the right ballpark. For 2027 he said growth should remain robust and directionally they think it is probably around 30%, but supply uncertainty prevents precise market-by-market guidance.
"Directionally, we think that's probably around 30% at this point." — Paul Oldham (CFO)
Semi visibility and data center second-wave
Q (Matthew Prisco · Cantor Fitzgerald): The analyst asked how much visibility they have at semi customers for 2027 and how the new wins affect growth versus WFE, and also asked about the size and timing of second-wave data center ramps in 2027.
A: Steve said visibility into 2027 from semi customers is excellent and customers gave detailed forecasts. He said more than 10% of semi revenue in 2027 will come from new products that target advanced logic and memory, and that second-wave data center customers could be >$300 million by 2029 but provide only a small amount in his 2027 forecast.
"So, as we look into '27, we believe that more than 10% of our semi revenue will come from new products." — Stephen Kelley (CEO)
2028 growth and tax charge impact
Q (Scott Graham · Seaport Research Partners): The analyst asked whether 2028 is also a growth year for Semi and Data Center, and then asked if a tax-related item flowed through this quarter and how it affected non-GAAP vs GAAP results.
A: Steve confirmed semi is expected to grow in 2028 and they believe data center will grow then as well. Paul said there was a one-time GAAP tax charge to write down a deferred tax asset because of a lower long-term tax rate in one jurisdiction, which raised GAAP tax rate to about 23.6% versus non-GAAP 15.7%.
"There was actually a charge in taxes on a GAAP basis associated with the deferred tax asset that we had to write down a bit because we were able to lower our long-term tax rate in one of the jurisdictions." — Paul Oldham (CFO)
800V product and gross margin path
Q (Yiling Sun · Citi): The analyst asked whether moving to 800 volts opens more customer opportunities beyond hyperscalers, and asked about gross margin trajectory and whether 43% exit margin could come earlier than planned.
A: Steve described a modular Power Distribution Board for 800 volts that supports transitional voltages and is customizable, and he said it includes liquid cooling. Paul said they now guide Q4 gross margin to 42% to 42.5% and still expect a 43% exit rate next year, which could be slightly higher or earlier depending on volume, with drop-through in the high 40s (just under 50%).
"We have 98% efficiency, best-in-class power density, 350 watts per cubic inch." — Stephen Kelley (CEO)
CPU content and share gains from readiness
Q (Shane Brett · Morgan Stanley): The analyst asked if CPU content is still a valid way to assess CPU opportunity versus accelerators and whether CPUs could be a meaningful tailwind in 2027. He also asked if readiness and scale could drive share gains beyond pure technology wins.
A: Steve said any reason to build an additional rack, whether for a GPU or CPU, increases demand for power supplies. He added that their strong execution and supply-chain performance during COVID have helped them out-execute peers and win new slots, so readiness and execution should help capture share.
"So whether it's a GPU or a CPU or some other type of chip, it generally drives more demand for power supplies and other power delivery products in these racks." — Stephen Kelley (CEO)
Engineering limits and I&M momentum
Q (Steve Barger · KeyBanc): The analyst asked if engineering bandwidth is the scarce resource as capacity returns and whether they are being selective on programs. He also asked if the new factories are a competitive advantage and about I&M momentum and multi-year growth potential.
A: Steve said engineering resources have always been the critical path even though they now have capacity that can get them through 2029. He said the Thailand and Philippines factories are impressive and act as competitive advantages, and that I&M has shifted to high-margin new products driving sequential growth that they expect to continue.
"I think engineering resources have always been the critical path for us, whether it's Semiconductor or Data Center." — Stephen Kelley (CEO)
New semi products and supply chain planning
Q (Mehdi Hosseini · SIG): The analyst asked whether the comment that new products drive a share of 2027 semi revenue implies AE will outgrow WFE, and asked how they work with OEM customers to avoid downstream mismatches seen post-COVID.
A: Steve clarified he meant more than 10% of semi revenues in 2027 will come from new products. He said product revenue in semi grew roughly 45% in 2026 (excluding service) and they expect to grow as fast or faster than WFE, while noting they ship into JIT bins with low and high targets and are keeping shipments within those ranges to avoid inventory issues.
"What I said was that in 2027, we expected more than 10% of our Semi revenues to come from new products, which is our starting point on new products." — Stephen Kelley (CEO)
Liquid cooling partnership and service growth
Q (Quinn Fredrickson · Baird): The analyst asked about potential inclusion in NVIDIA's MGX liquid-cooled reference architecture and what that would mean, and asked whether service revenue could grow faster in 2027 than this year.
A: Steve said it's positive to be included and they value NVIDIA as a key technology partner; he hopes that recognition shows their liquid cooling technology is advanced and ready to deploy. Paul said service growth is tied to installed base and they expect service to grow in the mid-single digits to 10% per year, so they are not counting on a large service acceleration next year.
"So, the simple answer is we would expect service to, kind of, grow in that mid-single digits to 10% every year pretty much." — Paul Oldham (CFO)
Hyperscaler strength and oxide etch wins
Q (Brian Chin · Stifel): The analyst asked if they expect strength from hyperscalers beyond their largest hyperscaler next year, and asked for details on oxide etch wins and progress in memory or other applications.
A: Steve confirmed they have 2 significant hyperscale customers and are seeing strength with them, and he said they are even air-shipping power supply units because customer hubs lack stock. He also said they won major slots in eVerest, eVoS and NavX in Q3 that are high-volume and will begin to ramp next year, with dielectric ramps in 2028 and additional deposition wins.
"In fact, we're actually having to air ship some of our power supply units because we can't keep enough in stock at the customer hub." — Stephen Kelley (CEO)
Reasons for semi acceleration and near outlook
Q (David Duley · Steelhead): The analyst asked the key reasons the Semi business accelerated in the back half of the year and whether that stronger growth should continue into the first half of next year given easier comps.
A: Paul said the main reason is stronger demand in the second half and that they started the year slower with tougher comps, but they have kept up with customer demand through inventory and capacity strategies. He said that could support another quarter or so of significant year-over-year growth, and Steve added they are benefiting from increasing etch and deposition intensity and investments in leading-edge logic and DRAM where they have more content.
"I think the first thing is we are seeing stronger demand in the second half." — Paul Oldham (CFO)