Financial Performance - Revenue reached $442 million, a 21% year-over-year increase[4,9] - Non-GAAP gross margin was 38.1%, showing a sequential increase[4,9] - Non-GAAP EPS was $1.50, up 76% year-over-year[4,9] - Operating cash flow was $47 million[4] - Total cash was $714 million[4] Revenue Breakdown by Market - Semiconductor Equipment revenue was $209.5 million, up 11.3% year-over-year[17] - Industrial & Medical revenue was $68.6 million, down 13.3% year-over-year[17] - Data Center Computing revenue was $141.6 million, up 94% year-over-year[17] - Telecom & Networking revenue was $21.8 million, down 11% year-over-year[17] Future Outlook - The company forecasts approximately 17% total revenue growth for 2025[7] - Data Center Computing revenue is projected to grow more than 80% in 2025[9] - Q3 2025 revenue guidance is $440 million ± $20 million[21] - Q3 2025 non-GAAP EPS guidance is $1.45 ± $0.25[21]

[PART I FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This part presents the unaudited consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for Advanced Energy Industries, Inc [ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20UNAUDITED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section presents Advanced Energy Industries, Inc.'s unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, along with detailed explanatory notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show a slight decrease in cash and cash equivalents but an overall increase in total assets and stockholders' equity from December 31, 2024, to June 30, 2025, indicating growth in the company's asset base and financial strength | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | Change (in millions) | % Change | | :--------------------------------- | :-------------------------- | :---------------------------- | :------------------- | :------- | | Cash and cash equivalents | $713.5 | $722.1 | $(8.6) | -1.19% | | Accounts receivable, net | $304.0 | $265.3 | $38.7 | 14.59% | | Inventories | $397.9 | $360.4 | $37.5 | 10.40% | | Total current assets | $1,459.5 | $1,389.3 | $70.2 | 5.05% | | Total assets | $2,379.6 | $2,261.9 | $117.7 | 5.20% | | Total current liabilities | $356.9 | $314.3 | $42.6 | 13.55% | | Total liabilities | $1,117.0 | $1,055.3 | $61.7 | 5.85% | | Total stockholders' equity | $1,257.3 | $1,203.1 | $54.2 | 4.51% | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) The company reported significant year-over-year growth in revenue, gross profit, and operating income for both the three and six months ended June 30, 2025, demonstrating improved operational efficiency and profitability, despite a decrease in interest income | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change (YoY) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change (YoY) | | :------------------- | :------------------------------- | :------------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Revenue, net | $441.5 | $364.9 | 21.0% | $846.1 | $692.4 | 22.2% | | Gross profit | $163.4 | $127.7 | 28.0% | $313.9 | $240.5 | 30.5% | | Operating income | $31.6 | $12.9 | 145.0% | $62.2 | $13.6 | 357.4% | | Interest income | $6.6 | $12.1 | -45.5% | $13.5 | $24.8 | -45.6% | | Net income | $25.2 | $14.8 | 70.3% | $49.9 | $20.2 | 147.0% | | Diluted EPS | $0.67 | $0.39 | 71.8% | $1.31 | $0.54 | 142.6% | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income significantly increased for both the three and six months ended June 30, 2025, primarily driven by higher net income and a positive impact from foreign currency translation, which shifted from a loss in the prior year to a gain in the current period | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change (YoY) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change (YoY) | | :------------------- | :------------------------------- | :------------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Net income | $25.2 | $14.8 | 70.3% | $49.9 | $20.2 | 147.0% | | Foreign currency translation | $16.2 | $(2.6) | N/A | $20.8 | $(9.2) | N/A | | Comprehensive income | $41.3 | $9.8 | 321.4% | $70.5 | $7.2 | 879.2% | [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity increased from $1,203.1 million at December 31, 2024, to $1,257.3 million at June 30, 2025, primarily due to net income and stock-based compensation, partially offset by share repurchases and dividend payments | Metric (in millions) | December 31, 2024 | June 30, 2025 | | :------------------- | :---------------- | :------------ | | Total Stockholders' Equity | $1,203.1 | $1,257.3 | | Net income | N/A | $25.2 | | Stock-based compensation | N/A | $12.2 | | Share repurchases | N/A | $(22.8) | | Dividends declared | N/A | $(3.9) | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly increased to $74.1 million for the six months ended June 30, 2025, compared to $14.0 million in the prior year, driven by higher net income. Investing activities saw a slight decrease in cash used, while financing activities used more cash due to share repurchases and debt-related payments | Metric (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change (YoY) | | :------------------- | :----------------------------- | :----------------------------- | :------------- | | Net cash from operating activities | $74.1 | $14.0 | 429.3% | | Net cash used in investing activities | $(43.6) | $(47.6) | -8.4% | | Net cash used in financing activities | $(42.8) | $(23.2) | 84.5% | | Net change in cash and cash equivalents | $(8.6) | $(58.5) | -85.3% | | Cash and cash equivalents, end of period | $713.5 | $986.1 | -27.7% | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail the company's accounting policies, revenue disaggregation, income tax, equity, fair value, derivatives, receivables, inventories, intangibles, restructuring, warranties, leases, stock compensation, commitments, debt, and cash flow information [NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION](index=9&type=section&id=NOTE%201.%20DESCRIPTION%20OF%20BUSINESS%20AND%20BASIS%20OF%20PRESENTATION) Advanced Energy Industries, Inc. provides precision power solutions globally, with financial statements prepared under U.S. GAAP, and recent accounting standard updates are not expected to have a material impact - Advanced Energy Industries, Inc. specializes in precision power conversion, measurement, and control solutions for global customers, focusing on transforming raw electrical power into highly controllable, usable power for complex equipment[18](index=18&type=chunk) - The company adopted a change in financial statement presentation from thousands to millions during 2025, which did not materially impact previously reported financial information[21](index=21&type=chunk) - New accounting standards, ASU 2023-09 (Income Tax Disclosures, effective Dec 31, 2025) and ASU 2024-03 (Expense Disaggregation Disclosures, effective Jan 1, 2027), are not expected to materially impact the consolidated financial statements upon adoption[25](index=25&type=chunk)[26](index=26&type=chunk) [NOTE 2. REVENUE](index=10&type=section&id=NOTE%202.%20REVENUE) Total revenue increased significantly for both the three and six months ended June 30, 2025, driven primarily by strong growth in the Data Center Computing and Semiconductor Equipment markets. Geographically, Japan showed the most substantial growth, while Taiwan experienced a decline Revenue by Market (in millions) | Market | Q2 2025 | Q2 2024 | % Change (YoY) | YTD 2025 | YTD 2024 | % Change (YoY) | | :-------------------- | :------ | :------ | :------------- | :------- | :------- | :------------- | | Semiconductor Equipment | $209.5 | $188.3 | 11.3% | $431.7 | $368.2 | 17.2% | | Industrial and Medical | $68.6 | $79.1 | -13.3% | $132.9 | $162.5 | -18.2% | | Data Center Computing | $141.6 | $73.0 | 94.0% | $237.8 | $114.9 | 107.0% | | Telecom and Networking | $21.8 | $24.5 | -11.0% | $43.7 | $46.8 | -6.6% | | **Total Revenue** | **$441.5**| **$364.9**| **21.0%** | **$846.1** | **$692.4** | **22.2%** | Revenue by Significant Countries (in millions) | Country | Q2 2025 | Q2 2024 | % Change (YoY) | YTD 2025 | YTD 2024 | % Change (YoY) | | :------ | :------ | :------ | :------------- | :------- | :------- | :------------- | | United States | $141.7 | $129.5 | 9.4% | $285.9 | $237.3 | 20.5% | | Mexico | $41.1 | $42.9 | -4.2% | $82.8 | $68.8 | 20.3% | | Taiwan | $28.6 | $39.1 | -26.9% | $57.5 | $78.6 | -26.9% | | Japan | $64.6 | $12.7 | 408.7% | $95.9 | $25.0 | 283.6% | Revenue by Category (in millions) | Category | Q2 2025 | Q2 2024 | % Change (YoY) | YTD 2025 | YTD 2024 | % Change (YoY) | | :------- | :------ | :------ | :------------- | :------- | :------- | :------------- | | Product | $396.1 | $325.4 | 21.7% | $756.3 | $611.6 | 23.7% | | Services and other | $45.4 | $39.5 | 14.9% | $89.8 | $80.8 | 11.1% | [NOTE 3. INCOME TAX](index=11&type=section&id=NOTE%203.%20INCOME%20TAX) The effective tax rate for the three and six months ended June 30, 2025, decreased compared to the prior year, primarily due to a more favorable mix of earnings in foreign jurisdictions with lower tax rates. The company is assessing the potential impact of the Pillar II minimum global effective tax rate regime and the recently signed OBBB Act, but currently does not expect a material impact on its 2025 effective tax rate | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------ | :------ | :------ | :------- | :------- | | Income from continuing operations, before income tax (in millions) | $29.3 | $18.6 | $59.2 | $26.3 | | Income tax provision (in millions) | $3.8 | $3.2 | $8.8 | $5.0 | | Effective tax rate | 13.0% | 17.2% | 14.9% | 19.0% | - The effective tax rate for 2025 was lower than 2024 primarily due to a more favorable mix of earnings in foreign jurisdictions subject to lower tax rates, as well as tax credits, partially offset by net U.S. tax on foreign operations and Pillar II top-up taxes[31](index=31&type=chunk) - The company is assessing the potential impact of the Pillar II minimum global effective tax rate regime and the One Big Beautiful Bill (OBBB) Act, but currently does not expect a material impact on its estimated annual effective tax rate in 2025[32](index=32&type=chunk)[33](index=33&type=chunk) [NOTE 4. STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE](index=12&type=section&id=NOTE%204.%20STOCKHOLDERS'%20EQUITY%20AND%20EARNINGS%20PER%20SHARE) Accumulated other comprehensive income (loss) shifted from a loss of $(11.8) million at December 31, 2024, to a gain of $8.8 million at June 30, 2025, primarily due to foreign currency translation. Diluted EPS from continuing operations increased significantly to $0.67 for Q2 2025 and $1.33 for YTD 2025. The company repurchased 0.3 million shares for $23.7 million during the six months ended June 30, 2025, with $173.4 million remaining authorized for future repurchases Accumulated Other Comprehensive Income (Loss) (in millions) | Component | December 31, 2024 | June 30, 2025 | | :-------------------------------- | :---------------- | :------------ | | Foreign Currency Translation | $(22.3) | $(1.5) | | Defined Employee Benefit Plan | $10.5 | $10.3 | | **Total Accumulated Other Comprehensive Income (Loss)** | **$(11.8)** | **$8.8** | Earnings Per Share (EPS) from Continuing Operations | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------- | :------ | :------ | :------- | :------- | | Basic EPS | $0.68 | $0.41 | $1.34 | $0.57 | | Diluted EPS | $0.67 | $0.41 | $1.33 | $0.56 | Share Repurchases (in millions, except per share amounts) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | Amount paid to repurchase shares | $23.7 | $0 | | Number of shares repurchased | 0.3 | 0 | | Average repurchase price per share | $84.19 | $0 | | Remaining authorized for future repurchases | $173.4 | N/A | [NOTE 5. FAIR VALUE MEASUREMENTS](index=15&type=section&id=NOTE%205.%20FAIR%20VALUE%20MEASUREMENTS) The company's non-pension assets and liabilities measured at fair value on a recurring basis, primarily certificates of deposit, investments, and deferred compensation liabilities, are classified within Level 2 of the fair value hierarchy. Foreign currency forward contracts decreased from $0.3 million to $0 | Description | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------- | :-------------------------- | :---------------------------- | | Certificates of deposit | $0.2 | $0.2 | | Foreign currency forward contracts | $0 | $0.3 | | Investments | $12.1 | $9.9 | | Deferred compensation liabilities | $10.9 | $10.1 | [NOTE 6. DERIVATIVE FINANCIAL INSTRUMENTS](index=15&type=section&id=NOTE%206.%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) The company uses derivative financial instruments, primarily one-month foreign currency forward contracts, to manage exchange rate risk associated with nonfunctional currency assets and liabilities. These are not designated as accounting hedges but economically offset foreign exchange fluctuations. The total outstanding foreign currency forward contracts decreased from $70.6 million at December 31, 2024, to $59.7 million at June 30, 2025 - Advanced Energy uses one-month foreign currency forward contracts to manage exchange rate risk on assets and liabilities denominated in nonfunctional currencies, with gains and losses included in other income (expense), net[41](index=41&type=chunk) | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :------------------------------------ | :-------------------------- | :---------------------------- | | Foreign currency forward contracts outstanding | $59.7 | $70.6 | [NOTE 7. ACCOUNTS RECEIVABLE, NET](index=17&type=section&id=NOTE%207.%20ACCOUNTS%20RECEIVABLE,%20NET) Accounts receivable, net, increased to $304.0 million as of June 30, 2025. The expected credit losses related to receivables decreased slightly from $0.9 million at December 31, 2024, to $0.7 million at June 30, 2025, due to write-offs | Metric | December 31, 2024 (in millions) | June 30, 2025 (in millions) | | :------------------------------------ | :---------------------------- | :-------------------------- | | Accounts receivable, net | N/A | $304.0 | | Expected credit losses related to receivables | $0.9 | $0.7 | [NOTE 8. INVENTORIES](index=17&type=section&id=NOTE%208.%20INVENTORIES) Total inventories increased to $397.9 million as of June 30, 2025, from $360.4 million at December 31, 2024, primarily driven by an increase in parts and raw materials | Component | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :---------------- | :-------------------------- | :---------------------------- | | Parts and raw materials | $296.1 | $255.1 | | Work in process | $23.3 | $20.6 | | Finished goods | $78.5 | $84.7 | | **Total Inventories** | **$397.9** | **$360.4** | [NOTE 9. INTANGIBLE ASSETS AND GOODWILL](index=18&type=section&id=NOTE%209.%20INTANGIBLE%20ASSETS%20AND%20GOODWILL) Net intangible assets decreased to $128.7 million as of June 30, 2025, from $139.4 million at December 31, 2024, due to amortization, partially offset by new acquisitions. Goodwill increased slightly to $300.9 million due to foreign currency translation and other factors Intangible Assets (Net Carrying Amount in millions) | Component | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Technology | $26.8 | $29.9 | | Customer relationships | $91.7 | $98.0 | | Trademarks and other | $10.2 | $11.5 | | **Total** | **$128.7** | **$139.4** | Amortization Expense (in millions) | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three Months Ended June 30, | $6.8 | $5.6 | | Six Months Ended June 30, | $11.1| $13.7| Goodwill (in millions) | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------- | :---------------- | :------------ | | Goodwill | $296.0 | $300.9 | [NOTE 10. RESTRUCTURING, ASSET IMPAIRMENTS, AND OTHER CHARGES](index=19&type=section&id=NOTE%2010.%20RESTRUCTURING,%20ASSET%20IMPAIRMENTS,%20AND%20OTHER%20CHARGES) Total restructuring, asset impairments, and other charges significantly increased to $7.0 million for Q2 2025 and $8.2 million for YTD 2025, primarily due to new restructuring plans in 2025 and ongoing activities from 2024 and 2023 plans, including manufacturing footprint optimization and functional support consolidation. A $1.6 million asset impairment charge was recorded in Q2 2025 related to vacating facilities Restructuring, Asset Impairments, and Other Charges (in millions) | Charge Type | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------ | :------ | :------ | :------- | :------- | | Restructuring | $4.0 | $0.1 | $4.6 | $0.1 | | Asset impairments | $1.6 | $0 | $1.6 | $0 | | Other charges | $1.4 | $0.5 | $2.0 | $0.8 | | **Total** | **$7.0**| **$0.6**| **$8.2** | **$0.9** | Restructuring Liabilities (in millions) | Plan | December 31, 2024 | June 30, 2025 | | :---------- | :---------------- | :------------ | | 2025 Plan | $0 | $2.9 |\n| 2024 Plan | $25.0 | $13.0 |\n| 2023 Plan | $5.0 | $4.4 |\n| **Total** | **$30.0** | **$20.3** | - During Q2 2025, the company approved a new restructuring plan (2025 Plan) to consolidate R&D, sales, and administrative functions, expected to be substantially complete by end of 2026[50](index=50&type=chunk) - A **$1.6 million** impairment charge was recorded during Q2 2025 related to remeasuring operating lease right-of-use assets and leasehold improvements due to vacating facilities[54](index=54&type=chunk) [NOTE 11. WARRANTIES](index=20&type=section&id=NOTE%2011.%20WARRANTIES) The estimated product warranty obligation increased to $6.3 million as of June 30, 2025, from $5.7 million at December 31, 2024, reflecting net increases to accruals partially offset by warranty expenditures | Metric | December 31, 2024 (in millions) | June 30, 2025 (in millions) | | :-------------------------- | :---------------------------- | :-------------------------- | | Estimated warranty obligation | $5.7 | $6.3 | [NOTE 12. LEASES](index=21&type=section&id=NOTE%2012.%20LEASES) Total operating lease cost increased for both the three and six months ended June 30, 2025. The present value of lease liabilities is $121.4 million, with estimated future payments extending through 2029 and thereafter. The weighted average remaining lease term is 8.3 years with a weighted average discount rate of 6.3% Total Operating Lease Cost (in millions) | Period | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------- | :------ | :------ | :------- | :------- | | Operating lease cost | $6.5 | $5.9 | $13.0 | $11.7 | | Short-term and variable lease cost | $1.7 | $0.9 | $3.1 | $1.6 | | **Total** | **$8.2**| **$6.8**| **$16.1**| **$13.3**| Estimated Future Payments on Operating Lease Liabilities (in millions) | Year Ending December 31, | Amount | | :----------------------- | :----- | | 2025 (remaining) | $13.6 | | 2026 | $22.7 | | 2027 | $19.4 | | 2028 | $19.1 | | 2029 | $16.0 | | Thereafter | $68.7 | | **Total lease payments** | **$159.5** | | Less: Interest | $(38.1)| | **Present value of lease liabilities** | **$121.4** | Lease Agreement Information | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Weighted average remaining lease term (in years) | 8.3 | 8.4 | | Weighted average discount rate | 6.3% | 6.1% | [NOTE 13. STOCK-BASED COMPENSATION](index=22&type=section&id=NOTE%2013.%20STOCK-BASED%20COMPENSATION) Stock-based compensation expense increased to $13.6 million for Q2 2025 and $26.6 million for YTD 2025, partly due to the Airity Technologies acquisition. The company has 1.4 million shares available for future issuance under the 2023 Incentive Plan and 0.5 million under the ESPP. Restricted Stock Units (RSUs) outstanding at June 30, 2025, totaled 1.0 million with a weighted average grant date fair value of $110.88 Stock-Based Compensation Expense (in millions) | Period | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------- | :------ | :------ | :------- | :------- | | Stock-based compensation expense | $13.6 | $11.4 | $26.6 | $22.4 | Shares Available for Future Issuance (in millions) | Plan | June 30, 2025 | | :-------------------------- | :------------ | | 2023 Incentive Plan | 1.4 | | ESPP | 0.5 | Restricted Stock Units (RSUs) (in millions, except fair value) | Metric | Six Months Ended June 30, 2025 | | :-------------------------- | :----------------------------- | | RSUs outstanding at end of period | 1.0 | | Weighted Average Grant Date Fair Value | $110.88 | [NOTE 14. COMMITMENTS AND CONTINGENCIES](index=23&type=section&id=NOTE%2014.%20COMMITMENTS%20AND%20CONTINGENCIES) The company is involved in various legal disputes and actions in the normal course of business. While the outcome is difficult to predict, management believes any ultimate loss would not be material to its financial position. Loss contingencies are accrued when probable and estimable - The company is involved in legal actions arising in the normal course of business, but management believes the results will not have a material adverse effect on its financial position, results of operations, or cash flows[64](index=64&type=chunk) [NOTE 15. LONG-TERM DEBT](index=23&type=section&id=NOTE%2015.%20LONG-TERM%20DEBT) Long-term debt consists primarily of $575.0 million in 2.5% Convertible Notes due 2028, with a net balance of $566.1 million as of June 30, 2025. The company terminated its prior credit agreement and entered into a new one on May 8, 2025, consisting of a Term Loan Facility and a $600.0 million Revolving Facility, both maturing on May 8, 2030. No borrowings were outstanding under the new Credit Agreement as of June 30, 2025. The fair value of the Convertible Notes was estimated at $693.2 million as of June 30, 2025 Long-Term Debt (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Convertible Notes due 2028, 2.5% interest | $575.0 | $575.0 |\n| Less: debt discount | $(8.9) | $(10.3) |\n| **Net long-term debt** | **$566.1** | **$564.7** | Interest Expense Related to Debt (in millions) | Period | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------- | :------ | :------ | :------- | :------- | | Interest expense | $3.4 | $6.1 | $6.9 | $12.4 | | Amortization of debt issuance costs | $0.8 | $0.9 | $1.5 | $1.7 | | **Total** | **$4.2**| **$7.0**| **$8.4** | **$14.1**| Credit Agreement Details | Metric | June 30, 2025 | | :-------------------------- | :------------ | | Available on Revolving Facility | $600.0 | | Estimated fair value of Convertible Notes | $693.2 | - On May 8, 2025, the company entered into a new credit agreement, including a senior unsecured term loan facility and a senior unsecured revolving facility, both maturing on May 8, 2030. No borrowings were outstanding under the new Credit Agreement as of June 30, 2025[67](index=67&type=chunk)[70](index=70&type=chunk) - Concurrent with the Convertible Notes issuance, the company entered into Note Hedges and sold Warrants, synthetically increasing the initial conversion price from **$137.46** to **$179.76** to reduce potential dilutive effects[75](index=75&type=chunk) [NOTE 16. SUPPLEMENTAL CASH FLOW INFORMATION AND OTHER DISCLOSURES](index=24&type=section&id=NOTE%2016.%20SUPPLEMENTAL%20CASH%20FLOW%20INFORMATION%20AND%20OTHER%20DISCLOSURES) Supplemental cash flow information for the six months ended June 30, 2025, includes $22.0 million in capital expenditures in accounts payable and other accrued expenses. Cash paid for interest was $7.2 million, and for income taxes was $14.7 million, with $2.9 million received from income taxes Supplemental Cash Flow Information (in millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Capital expenditures in accounts payable and other accrued expenses | $22.0 | $8.1 | | Cash paid for interest | $7.2 | $12.4 | | Cash paid for income taxes | $14.7 | $23.6 | | Cash received from income taxes | $2.9 | $0.7 | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=25&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial performance, condition, and future outlook, highlighting significant revenue growth driven by Data Center Computing and Semiconductor Equipment markets, improved gross margins, and increased operating expenses due to compensation and restructuring. It also discusses liquidity, debt, dividends, share repurchases, and cash flow dynamics, along with forward-looking statements and critical accounting policies [Special Note on Forward-Looking Statements](index=25&type=section&id=Special%20Note%20on%20Forward-Looking%20Statements) This section cautions readers that the report contains forward-looking statements based on management's current estimates and assumptions, which involve risks and uncertainties that could cause actual results to differ materially. Key risks include market volatility, customer demand, global economic conditions, currency fluctuations, cybersecurity, supply chain disruptions, and the ability to integrate acquisitions - The report contains forward-looking statements based on management's current estimates, forecasts, and assumptions, which are subject to risks and uncertainties that could cause actual results to differ materially[79](index=79&type=chunk)[80](index=80&type=chunk) - Key risks include volatility in competing industries, ability to meet customer demand, global economic conditions (tariffs, conflicts, inflation), customer price sensitivity, U.S. Dollar value changes, customer base concentration, information security breaches, ERP implementation difficulties, loss of key personnel, manufacturing footprint optimization risks, supply chain disruptions, acquisition integration challenges, quality issues, international operation risks, intellectual property enforcement, regulatory risks, debt obligations, pension obligations, intangible asset valuation, and potential dilution from convertible debt[81](index=81&type=chunk)[83](index=83&type=chunk) [BUSINESS AND MARKET OVERVIEW](index=28&type=section&id=BUSINESS%20AND%20MARKET%20OVERVIEW) Advanced Energy provides precision power conversion, measurement, and control solutions across Semiconductor Equipment, Industrial and Medical, Data Center Computing, and Telecom and Networking markets. The company is executing a manufacturing consolidation plan, including closing its Zhongshan, China facility, and is monitoring tariff impacts. Growth is driven by AI, energy efficiency, and automation trends, with strong demand in Data Center Computing and Semiconductor Equipment, a recovery in Industrial and Medical, and stable conditions in Telecom and Networking - Advanced Energy provides highly engineered, critical, precision power conversion, measurement, and control solutions, operating as a single segment of power electronics conversion products across four key markets: Semiconductor Equipment, Industrial and Medical, Data Center Computing, and Telecom and Networking[84](index=84&type=chunk)[85](index=85&type=chunk) - The company is continuing its manufacturing consolidation plan, including the shutdown of its Zhongshan, China facility, with final closure activities expected by early 2026[86](index=86&type=chunk) - The Semiconductor Equipment market is driven by AI, energy efficiency, and automobile electrification, with strong demand for leading-edge devices offset by lower trailing-edge demand and U.S. export restrictions to China[91](index=91&type=chunk)[94](index=94&type=chunk) - The Data Center Computing market is experiencing meaningful growth due to rapid AI investments, accelerated adoption of next-generation AI processors, and the transition to high-power 48-volt power shelf infrastructure[98](index=98&type=chunk)[99](index=99&type=chunk) - The Industrial and Medical market resumed sequential growth in Q2 2025 as customer inventories normalized after a major downturn, with this trend expected to continue, potentially limited by tariff impacts[97](index=97&type=chunk) [Results of Continuing Operations](index=32&type=section&id=Results%20of%20Continuing%20Operations) The company achieved substantial growth in revenue, gross profit, and operating income for both the three and six months ended June 30, 2025, primarily driven by strong performance in Data Center Computing and Semiconductor Equipment. Gross margin improved due to increased revenue and manufacturing cost reductions. Operating expenses rose due to higher compensation and restructuring charges, while the effective tax rate decreased due to a favorable mix of foreign earnings. Non-GAAP results also showed significant improvements | Metric (in millions) | Q2 2025 | Q2 2024 | % Change (YoY) | YTD 2025 | YTD 2024 | % Change (YoY) | | :------------------------------------ | :------ | :------ | :------------- | :------- | :------- | :------------- | | Revenue | $441.5 | $364.9 | 21.0% | $846.1 | $692.4 | 22.2% | | Gross profit | $163.4 | $127.7 | 28.0% | $313.9 | $240.5 | 30.5% | | Operating income from continuing operations | $31.6 | $12.9 | 145.0% | $62.2 | $13.6 | 357.4% | | Income from continuing operations, before income tax | $29.3 | $18.6 | 57.5% | $59.2 | $26.3 | 125.1% | | Income tax provision | $3.8 | $3.2 | 18.8% | $8.8 | $5.0 | 76.0% | | Income from continuing operations | $25.5 | $15.4 | 65.6% | $50.4 | $21.3 | 136.6% | [Revenue](index=33&type=section&id=Revenue) Total revenue increased by 21.0% for Q2 2025 and 22.2% for YTD 2025, primarily driven by significant growth in Data Center Computing (94.0% for Q2, 107.0% for YTD) and Semiconductor Equipment (11.3% for Q2, 17.2% for YTD). Industrial and Medical, and Telecom and Networking markets experienced declines | Market | Q2 2025 (in millions) | Q2 2024 (in millions) | % Change (YoY) | YTD 2025 (in millions) | YTD 2024 (in millions) | % Change (YoY) | | :-------------------- | :-------------------- | :-------------------- | :------------- | :--------------------- | :--------------------- | :------------- | | Semiconductor Equipment | $209.5 | $188.3 | 11.3% | $431.7 | $368.2 | 17.2% | | Industrial and Medical | $68.6 | $79.1 | -13.3% | $132.9 | $162.5 | -18.2% | | Data Center Computing | $141.6 | $73.0 | 94.0% | $237.8 | $114.9 | 107.0% | | Telecom and Networking | $21.8 | $24.5 | -11.0% | $43.7 | $46.8 | -6.6% | | **Total** | **$441.5** | **$364.9** | **21.0%** | **$846.1** | **$692.4** | **22.2%** | - The increase in Semiconductor Equipment revenue was due to continued cyclical recovery and strong demand for leading-edge process tools, while Data Center Computing revenue surged from hyperscale investments in AI-driven platforms and design wins[106](index=106&type=chunk) - Industrial and Medical revenue decreased due to customer inventory rebalancing, and Telecom and Networking revenue saw a modest decrease due to slowing mobile data traffic, partially offset by increased networking infrastructure spending[106](index=106&type=chunk)[107](index=107&type=chunk) [Gross Profit and Gross Margin](index=33&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Gross profit increased by 28.0% for Q2 2025 and 30.5% for YTD 2025, with gross margin improving to 37.0% and 37.1% respectively. This improvement was largely driven by increased revenue and manufacturing cost reduction programs, which positively impacted gross margin by 110 and 190 basis points for the three and six months ended June 30, 2025 | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | % Change (YoY) | YTD 2025 (in millions) | YTD 2024 (in millions) | % Change (YoY) | | :---------- | :-------------------- | :-------------------- | :------------- | :--------------------- | :--------------------- | :------------- | | Gross profit | $163.4 | $127.7 | 28.0% | $313.9 | $240.5 | 30.5% | | Gross margin | 37.0% | 35.0% | 2.0 pp | 37.1% | 34.7% | 2.4 pp | - Manufacturing cost reduction programs positively impacted gross margin by **110 basis points** during the three months ended June 30, 2025, and **190 basis points** during the six months ended June 30, 2025[109](index=109&type=chunk) [Operating Expenses](index=35&type=section&id=Operating%20Expenses) Total operating expenses increased for both the three and six months ended June 30, 2025, primarily due to higher compensation costs in R&D and SG&A, and increased restructuring, asset impairments, and other charges. Amortization of intangible assets declined as some assets reached the end of their useful life | Operating Expense (in millions) | Q2 2025 | Q2 2024 | % Change (YoY) | YTD 2025 | YTD 2024 | % Change (YoY) | | :------------------------------------ | :------ | :------ | :------------- | :------- | :------- | :------------- | | Research and development | $59.0 | $52.3 | 12.8% | $113.2 | $102.2 | 10.8% | | Selling, general, and administrative | $60.2 | $55.1 | 9.3% | $119.2 | $110.1 | 8.3% | | Amortization of intangible assets | $5.6 | $6.8 | -17.6% | $11.1 | $13.7 | -19.0% | | Restructuring, asset impairments, and other charges | $7.0 | $0.6 | 1066.7% | $8.2 | $0.9 | 811.1% | | **Total operating expenses** | **$131.8**| **$114.8**| **14.8%**

Financial Performance Overview [Second Quarter 2025 Financial Results](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results) Advanced Energy reported strong Q2 2025 results, exceeding guidance due to robust AI data center demand and early market recovery Q2 2025 Key Financial Metrics | Financial Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Revenue | $441.5M | $404.6M | $364.9M | | GAAP Net Income (cont. ops) | $25.5M | $24.9M | $15.4M | | GAAP EPS (cont. ops) | $0.67 | $0.65 | $0.41 | | Non-GAAP Net Income | $56.6M | $46.9M | $32.0M | | Non-GAAP EPS | $1.50 | $1.23 | $0.85 | - The strong quarterly results were driven by **high customer demand for AI data center solutions**[3](index=3&type=chunk) - **Data Center Computing revenue** achieved a quarterly record, nearly doubling on a year-over-year basis[6](index=6&type=chunk) [Third Quarter 2025 Guidance](index=2&type=section&id=Third%20Quarter%202025%20Guidance) The company projects Q3 2025 revenue between $420 million and $460 million, with Non-GAAP EPS ranging from $1.20 to $1.70 Q3 2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Revenue | $440M +/- $20M | | GAAP EPS (cont. ops) | $0.82 +/- $0.25 | | Non-GAAP EPS | $1.45 +/- $0.25 | [Shareholder Returns](index=1&type=section&id=Shareholder%20Returns) Advanced Energy generated **$46.5 million** in Q2 cash flow from operations, returning capital via **$3.9 million** in dividends and **$22.8 million** in stock repurchases Q2 2025 Cash Flow and Capital Allocation | Activity | Amount (in millions) | | :--- | :--- | | Cash Flow from Continuing Operations | $46.5M | | Quarterly Dividends Paid | $3.9M | | Common Stock Repurchased | $22.8M | Consolidated Financial Statements [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 revenue increased to **$441.5 million**, with gross margin improving to **37.0%**, driving operating income to **$31.6 million** Statement of Operations Highlights (Q2 2025 vs. Q2 2024) | Metric (in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue, net | $441.5 | $364.9 | | Gross profit | $163.4 | $127.7 | | Gross margin % | 37.0% | 35.0% | | Operating income | $31.6 | $12.9 | | Income from continuing operations | $25.5 | $15.4 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to **$2.38 billion** by June 30, 2025, driven by receivables and inventories, with liabilities at **$1.12 billion** and equity at **$1.26 billion** Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $713.5 | $722.1 | | Total current assets | $1,459.5 | $1,389.3 | | Total assets | $2,379.6 | $2,261.9 | | Total liabilities | $1,117.0 | $1,055.3 | | Total stockholders' equity | $1,257.3 | $1,203.1 | [Condensed Consolidated Statement of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Net cash from operating activities significantly improved to **$74.1 million** for H1 2025, with **$43.6 million** used in investing and **$42.8 million** in financing Cash Flow Summary - Six Months Ended June 30 (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $74.1 | $14.0 | | Net cash from investing activities | $(43.6) | $(47.6) | | Net cash from financing activities | $(42.8) | $(23.2) | | Net change in cash | $(8.6) | $(58.5) | Supplemental Information and Non-GAAP Reconciliations [Net Revenue by Market](index=8&type=section&id=Net%20Revenue%20by%20Market) **Data Center Computing** revenue nearly doubled to **$141.6 million** in Q2 2025, while Industrial & Medical and Telecom & Networking segments declined Net Revenue by Market (in millions) | Market Segment | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Semiconductor Equipment | $209.5 | $188.3 | +11.3% | | Industrial and Medical | $68.6 | $79.1 | -13.3% | | Data Center Computing | $141.6 | $73.0 | +94.0% | | Telecom and Networking | $21.8 | $24.5 | -11.0% | | **Total** | **$441.5** | **$364.9** | **+21.0%** | [Reconciliation of Non-GAAP Measures](index=3&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) Reconciliations from GAAP to non-GAAP measures exclude non-cash and non-operational items, providing a clearer view of core performance - Management uses non-GAAP measures to evaluate business performance, excluding non-cash charges and non-operational items like **stock-based compensation**, **amortization**, and **acquisition costs**[12](index=12&type=chunk)[13](index=13&type=chunk) [Reconciliation of Operating Income and Margin](index=9&type=section&id=Reconciliation%20of%20Operating%20Income%20and%20Margin) Q2 2025 Non-GAAP operating income was **$64.5 million** (**14.6% margin**), significantly higher than GAAP due to adjustments for non-cash items GAAP vs. Non-GAAP Operating Margin (Q2 2025) | Metric | GAAP | Non-GAAP | | :--- | :--- | :--- | | Gross Margin | 37.0% | 38.1% | | Operating Income | $31.6M | $64.5M | | Operating Margin | 7.2% | 14.6% | [Reconciliation of Net Income and EPS](index=10&type=section&id=Reconciliation%20of%20Net%20Income%20and%20EPS) Q2 2025 Non-GAAP net income reached **$56.6 million** (**$1.50 per share**), exceeding GAAP due to adjustments for amortization and other costs GAAP vs. Non-GAAP Net Income & EPS (Q2 2025) | Metric | GAAP (cont. ops) | Non-GAAP | | :--- | :--- | :--- | | Net Income | $25.5M | $56.6M | | Diluted EPS | $0.67 | $1.50 | [Reconciliation of Q3 2025 Guidance](index=11&type=section&id=Reconciliation%20of%20Q3%202025%20Guidance) Q3 2025 GAAP EPS guidance is adjusted for items like stock-based compensation and amortization to derive the Non-GAAP EPS range Q3 2025 EPS Guidance Reconciliation (Midpoint) | Metric | Per Share Amount | | :--- | :--- | | GAAP EPS | $0.82 | | Stock-based compensation | $0.38 | | Amortization of intangible assets | $0.15 | | Restructuring & other costs | $0.24 | | Tax effects | $(0.14) | | **Non-GAAP EPS** | **$1.45** | Other Information [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section cautions that forward-looking statements are subject to risks including industry volatility, global economic conditions, and supply chain disruptions - The report contains forward-looking statements regarding the company's beliefs, expectations, and plans, which are not historical facts[14](index=14&type=chunk) - Identified risks include business fluctuations, ability to meet customer demand, global economic conditions, **supply chain disruptions**, and integration of acquisitions[15](index=15&type=chunk)[16](index=16&type=chunk) [About Advanced Energy](index=2&type=section&id=About%20Advanced%20Energy) Advanced Energy is a global leader in precision power conversion, measurement, and control solutions for mission-critical applications across diverse industries - Advanced Energy is a global leader in highly engineered, precision power conversion, measurement, and control solutions for mission-critical applications[9](index=9&type=chunk)

Core Viewpoint - Cavalry Capital Corp. has announced a definitive agreement for a business combination with Advanced Energy Fuels, Inc., which will result in Advanced Energy becoming a wholly-owned subsidiary of Cavalry [1][4]. Transaction Details - The business combination will involve Cavalry acquiring all outstanding common shares of Advanced Energy, with shareholders receiving one post-consolidation common share of Cavalry for each common share of Advanced Energy [1]. - The transaction is expected to meet the listing requirements for a Tier 2 mining issuer under the TSX Venture Exchange [1]. Share Consolidation and Private Placement - Cavalry will consolidate its outstanding share capital at a ratio of 1.66 pre-consolidation shares for each post-consolidation share, resulting in approximately 3,893,072 shares outstanding post-consolidation [3]. - Approximately 19,879,938 post-consolidation shares will be issued to former holders of Advanced Energy common shares as part of the purchase price [3]. - A private placement will be completed for at least 10,000,000 subscription receipts at a price of $0.25 each, aiming for gross proceeds of at least $2,500,000 [3]. Project Development - Proceeds from the private placement will be used to advance the South Woodie Woodie Manganese Project in the Pilbara Region, with plans to complete a pre-feasibility study [3]. - Advanced Energy will acquire a 100% interest in the SWWM Project by paying AUD$450,000 to Trek Metals Limited and issuing shares to Trek [3]. Management and Name Change - The management and board of directors of the resulting issuer will consist of three nominees from Advanced Energy and two from Cavalry [10]. - Cavalry will change its name to "Advanced Energy Fuels Group Limited" or another name determined by Advanced Energy [10]. Regulatory and Approval Conditions - The transaction is subject to customary closing conditions, including approvals from the TSXV and completion of the private placement and consolidation [6]. - No finder's fees are payable in connection with the transaction, except for the private placement [5].

Industry Overview - The semiconductor industry is experiencing a significant recovery, driven by optimism surrounding artificial intelligence (AI), particularly generative AI, which has increased demand for microchips [1] - The robust demand across various sectors has resulted in substantial revenue growth for chipmakers, contributing significantly to overall market performance and last year's market rally [2] Sales Performance - Worldwide semiconductor sales rose 3.5% sequentially in May, increasing from $57 billion in April to $59 billion, with a year-over-year surge of 19.8%, marking the 11th consecutive month of growth above 17% [4] - SIA President and CEO John Neuffer noted that global semiconductor demand remains high, with first-quarter sales surpassing the previous year's figures, particularly driven by a 45% year-over-year increase in the Americas [5] Future Outlook - The semiconductor market is projected to continue expanding at a double-digit pace into 2025, supported by strong demand for data center chips and memory products [7] - Global semiconductor revenues reached $627.6 billion in 2024, up 19.1% from $526.8 billion in 2023, with the first quarter of 2025 generating $167.7 billion, an 18.8% increase from the previous year [6] Investment Opportunities - Recommended semiconductor stocks include Taiwan Semiconductor Manufacturing Company Limited (TSM), Advanced Energy Industries, Inc. (AEIS), and RF Industries, Ltd. (RFIL), all of which have strong earnings growth potential and favorable Zacks rankings [3] - TSM's expected earnings growth rate for the current year is 34.1%, with a 19.8% year-over-year sales increase in May [9] - AEIS is expected to see a 39.1% earnings growth rate, while RFIL's earnings growth rate is projected to exceed 100% [11][12]

Group 1 - Advanced Energy Industries, Inc. (AEIS) is experiencing significant activity in the options market, particularly with the July 18, 2025 $75 Put option showing high implied volatility, indicating potential for a major price movement [1] - Implied volatility reflects market expectations for future stock movement, suggesting that investors anticipate a significant event that could lead to either a rally or a sell-off [2] - Advanced Energy Industries holds a Zacks Rank 2 (Strong Buy) in the Semiconductor Equipment - Wafer Fabrication industry, which is in the top 4% of the Zacks Industry Rank, with recent earnings estimates for the current quarter increasing from $1.23 to $1.28 per share [3] Group 2 - The high implied volatility for Advanced Energy Industries may indicate a developing trading opportunity, as options traders often seek to sell premium on options with such volatility to capture decay [4]

Core Viewpoint - Advanced Energy Industries (AEIS) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][4]. Earnings Estimates and Stock Ratings - The Zacks rating system is solely based on a company's changing earnings picture, tracking the Zacks Consensus Estimate for EPS from sell-side analysts [2]. - The Zacks rating upgrade for Advanced Energy reflects an improvement in its earnings outlook, which is expected to positively impact its stock price [4][6]. Impact of Earnings Estimate Revisions - Changes in a company's future earnings potential, as shown by earnings estimate revisions, are strongly correlated with near-term stock price movements [5]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to significant price movements based on their investment actions [5]. Advanced Energy's Earnings Outlook - Advanced Energy is projected to earn $5.16 per share for the fiscal year ending December 2025, with no year-over-year change expected [9]. - Over the past three months, the Zacks Consensus Estimate for Advanced Energy has increased by 4.6%, indicating a positive trend in earnings estimates [9]. Zacks Rank System Overview - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [8]. - The upgrade of Advanced Energy to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10][11].

Core Viewpoint - Nvidia is the leading player in AI infrastructure, but other companies like Advanced Energy Industries and DigitalBridge Group are emerging as significant contributors in the sector, offering potential investment opportunities for those looking beyond Nvidia [1][12]. Group 1: Advanced Energy Industries (AEIS) - Advanced Energy Industries specializes in precision power conversion systems, crucial for powering advanced semiconductors and data centers that support AI workloads [3]. - AEIS has a Zacks Rank 2 (Buy) with projected annual earnings growth of 27% over the next three to five years, driven by strong demand in semiconductor equipment and data center infrastructure [4][10]. - The stock trades at 25.7x forward earnings, which is attractive when adjusted for growth, as indicated by a PEG ratio below 1, suggesting it is undervalued relative to its earnings trajectory [5]. - AEIS has recently hit all-time highs, indicating strong momentum and alignment of fundamentals with technology trends [6]. Group 2: DigitalBridge Group (DBRG) - DigitalBridge Group is a digital infrastructure investment firm that partners with major operators to develop hyperscale data centers, essential for AI applications [9]. - DBRG also holds a Zacks Rank 2 (Buy), with earnings projected to grow at a 26% annual rate over the next three to five years due to increasing demand for digital infrastructure [10]. - The stock trades at 19.2x forward earnings with a PEG ratio below 1, indicating an attractive valuation relative to its growth potential, despite a recent trend of lower stock prices [11]. - Recent price action suggests a shift in momentum to the upside, indicating that investors are starting to recognize the long-term value of DBRG [11]. Group 3: Investment Considerations - As the AI boom continues, a broader ecosystem is necessary to support the technologies, where companies like AEIS and DBRG play critical roles [12]. - Both AEIS and DBRG are showing improving fundamentals, strong earnings growth outlooks, and technical momentum, making them compelling alternatives for investors seeking to diversify their exposure to the AI megatrend [14][15].

Company Overview - Advanced Energy Industries (AEIS) shares increased by 3.6% to close at $128.97, supported by higher trading volume compared to normal sessions [1] - The stock has gained 5% over the past four weeks, driven by increased demand in the semiconductor and data center computing markets [1] Earnings Expectations - AEIS is expected to report quarterly earnings of $1.28 per share, reflecting a year-over-year increase of 50.6% [2] - Projected revenues for the upcoming report are $419.09 million, which is a 14.8% increase from the same quarter last year [2] Earnings Estimate Revisions - The consensus EPS estimate for AEIS has been revised 7.4% higher in the last 30 days, indicating a positive trend that typically correlates with stock price appreciation [3] - The stock currently holds a Zacks Rank of 3 (Hold), suggesting a neutral outlook [3] Industry Context - AEIS operates within the Zacks Semiconductor Equipment - Wafer Fabrication industry, where ASML is another notable player [3] - ASML's consensus EPS estimate has increased by 0.7% to $5.87, representing a year-over-year change of 35.9% [4] - ASML currently holds a Zacks Rank of 2 (Buy), indicating a more favorable outlook compared to AEIS [4]

Industry Overview - Semiconductor sales have shown steady growth, driven by optimism around artificial intelligence (AI), particularly generative AI, with robust demand from various industries significantly boosting revenues [1][3] - Global chip sales increased by 2.5% sequentially in April, reaching $57 billion, and year-over-year sales jumped 22.7%, marking the 11th consecutive month of growth above 17% [3][4] - The Semiconductor Industry Association (SIA) forecasts continued double-digit growth in 2025, supported by strong demand for chips in data centers and the memory chip market [6] Financial Performance - In 2024, global semiconductor sales reached $627.6 billion, a 19.1% increase from $526.8 billion in 2023, with the final quarter of 2024 alone seeing $170.9 billion in sales, up 17.1% year-over-year [5] - Advanced Energy Industries, Inc. (AEIS) leads peers with a projected earnings growth of 39.1% and a 10% rise in earnings estimates over the past 60 days [8][15] Company Highlights - Taiwan Semiconductor Manufacturing Company Limited (TSM) is the world's largest dedicated integrated circuit foundry, with an expected earnings growth rate of 30.5% for the current year [7][9] - Texas Instruments (TXN) has an expected earnings growth rate of 6.7% for next year, with a 3.5% improvement in current-year earnings estimates over the past 60 days [10][11] - ASML Holding N.V. is a leader in advanced technology systems for the semiconductor industry, with an expected earnings growth rate of 30.5% for the current year [12][13] - Advanced Energy Industries, Inc. focuses on power subsystems and process-control technologies for the semiconductor industry, with an expected earnings growth rate of 39.1% [14][15]