Manufacturing equipment and systems provider Advanced Energy (NASDAQ: AEIS) reported Q1 CY2026 results beating Wall Street’s revenue expectations, with sales up 26.3% year on year to $511 million. Guidance for next quarter’s revenue was optimistic at $540 million at the midpoint, 2.5% above analysts’ estimates. Its non-GAAP profit of $2.09 per share was 5.6% above analysts’ consensus estimates.

Is now the time to buy Advanced Energy? Find out by accessing our full research report, it’s free.

“In the first quarter, we achieved a key strategic milestone by delivering non-GAAP gross margin above 40%,” said Steve Kelley, president and CEO of Advanced Energy.

Company Overview

Pioneering technologies for radio frequency power delivery, Advanced Energy (NASDAQ: AEIS) provides power supplies, thermal management systems, and measurement and control instruments for various manufacturing processes.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Regrettably, Advanced Energy’s sales grew at a tepid 5.6% compounded annual growth rate over the last five years. This fell short of our benchmark for the industrials sector and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Advanced Energy’s annualized revenue growth of 10.6% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

Advanced Energy also breaks out the revenue for its most important segments, Semiconductor Equipment and Industrial and Medical Equipment, which are 42.9% and 14.1% of revenue. Over the last two years, Advanced Energy’s Semiconductor Equipment revenue (i.e., plasma power) averaged 5.3% year-on-year growth. On the other hand, its Industrial and Medical Equipment revenue (i.e., robotics) averaged 6% declines.

This quarter, Advanced Energy reported robust year-on-year revenue growth of 26.3%, and its $511 million of revenue topped Wall Street estimates by 1%. Company management is currently guiding for a 22.3% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 18.7% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and suggests its newer products and services will catalyze better top-line performance.

ALSO WORTH WATCHING: Nvidia’s Quiet Partner. Nvidia’s chips cost a hundred grand. The connectors that make them work cost even more. One company makes them all.

Every AI server needs specialized infrastructure the chip companies don’t make. High-speed cables. Power connectors. Thermal sensors. This 90-year-old company built a monopoly on it. The AI boom just started. This stock is still flying under the radar. Claim The Stock Ticker Here for FREE.

Operating Margin

Advanced Energy’s operating margin has been trending up over the last 12 months and averaged 8.7% over the last five years. Its profitability was higher than the broader industrials sector, showing it did a decent job managing its expenses.

Analyzing the trend in its profitability, Advanced Energy’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q1, Advanced Energy generated an operating margin profit margin of 13.4%, up 5.8 percentage points year on year. The increase was solid, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Advanced Energy’s unimpressive 5.3% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

Advanced Energy’s two-year annual EPS growth of 31.4% was fantastic and topped its 10.6% two-year revenue growth.

Diving into Advanced Energy’s quality of earnings can give us a better understanding of its performance. Advanced Energy’s operating margin has expanded over the last two years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q1, Advanced Energy reported adjusted EPS of $2.09, up from $1.23 in the same quarter last year. This print beat analysts’ estimates by 5.6%. Over the next 12 months, Wall Street expects Advanced Energy’s full-year EPS of $7.27 to grow 27.2%.

Key Takeaways from Advanced Energy’s Q1 Results

It was great to see Advanced Energy’s EPS guidance for next quarter top analysts’ expectations. We were also glad its revenue guidance for next quarter exceeded Wall Street’s estimates. On the other hand, its adjusted operating income missed and its EBITDA fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 11.2% to $344 immediately after reporting.

Advanced Energy underperformed this quarter, but does that create an opportunity to invest right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).