Why Is Advanced Energy (AEIS) Down 5.5% Since Last Earnings Report?

Core Viewpoint - Advanced Energy Industries (AEIS) reported strong Q3 earnings, beating estimates and showing significant year-over-year revenue growth, despite some declines in specific segments [3][4][10]. Financial Performance - AEIS reported non-GAAP earnings of $1.74 per share, exceeding the Zacks Consensus Estimate by 18.37%, with a year-over-year increase of 77.6% and a sequential increase of 16% [3]. - Revenues reached $463.3 million, surpassing estimates by 5.14% and increasing 23.8% year over year, with a sequential growth of 5% [3]. Segment Performance - Semiconductor Equipment revenues, accounting for 42.4% of total revenues, decreased by 0.5% year over year to $196.6 million and fell 6.2% sequentially [4]. - Industrial & Medical revenues, making up 15.4% of total revenues, declined 7.4% year over year to $71.2 million but increased 3.8% sequentially [4]. - Data Center Computing revenues, representing 37% of total revenues, surged 113% year over year to $171.6 million, with a sequential jump of 21.2% [4]. - Telecom & Networking revenues, comprising 5.2% of total revenues, rose 24.5% year over year to $24 million and increased 9.6% sequentially [5]. Operating Results - The non-GAAP gross margin improved to 39.1%, up 280 basis points year over year and 100 basis points sequentially, aided by factors such as factory closures in China and lower tariff costs [6]. - Non-GAAP operating expenses were $103.4 million, up 6.8% year over year but down 0.2% sequentially, with the operating margin increasing to 20.8% compared to 9.6% in the previous year [7]. Balance Sheet & Cash Flow - As of September 30, 2025, cash and cash equivalents stood at $758.6 million, an increase from $713.5 million as of June 30 [8]. - Cash flow from operations was $79 million, up from $46.5 million in the previous quarter [8]. Guidance & Outlook - For Q4 2025, AEIS expects non-GAAP earnings of $1.75 per share, with anticipated revenues of $470 million, reflecting sequential growth [9][10]. - The company projects overall revenue growth of approximately 20% for 2025, with Data Center revenues expected to double [11]. - Estimates for the stock have been trending upward, with a consensus estimate shift of 19.05% in the past month, leading to a Zacks Rank of 1 (Strong Buy) [12][14].