Any targets beyond the current quarter presented today should not be interpreted as guidance. First quarter revenue came in above the midpoint of guidance, driven by record data center revenue. In the second quarter, we expect to deliver record revenue, largely due to strength in semiconductor. Looking into the second half of 2026, we see increased demand in all of our markets.
We are also seeing steady improvement in the industrial medical market, as evidenced by a 14% sequential increase in bookings and a growing backlog. We delivered over 40% gross margin in the first quarter, the culmination of a multi-year effort to improve our manufacturing efficiency and product differentiation. Looking forward, we believe that we can further increase gross margin as high-value products ramp to volume and manufacturing efficiency continues to improve. Given our progress over the last few years, we are confident that we can achieve the longer-term goal of greater than 43% gross margin.
Given the strong demand environment, we are executing our capacity expansion plans in Malaysia, the Philippines, and Mexico. Exiting the year, we expect to have over $2.5 billion in revenue-generating capacity. In the first quarter, customer forecast strengthened considerably, which we believe will drive record performance in 2026 and continued growth in 2027. We are also benefiting from an uptick in demand for our system power products, largely due to recent wins and test in wafer fab equipment applications.
| Metric | Period | Current guidance |
|---|---|---|
| Revenue | Q2 2026 | ~$540 million ±$20 million (Sequential growth led by semiconductor and industrial/medical; data center moderates) |
| Gross margin | Q2 2026 | Up 20–50 bps sequentially (Higher volumes and more favorable mix) |
| Operating expenses | Q2 2026 | $112M–$114M (Up on new-product investment and annual merit increases) |
| Non-GAAP EPS | Q2 2026 | $2.18 ±$0.25 on 40.6M shares |
| Tax rate | Q2 2026 | 16%–17% (Returns to target range) |
| Total revenue growth | FY2026 | Low-to-mid 20% range (Raised on stronger demand and new-product momentum) |
| Data center revenue growth | FY2026 | Mid-30% range (Raised on strong AI solution adoption) |
| Semiconductor revenue | 2H 2026 vs 2H 2025 | Up over 30% (Accelerating in second half) |
| CapEx | FY2026 | $170M–$180M (Up slightly on initial Thailand factory investment) |
| Operating expenses | FY2026 | ~$460M, graduating up sequentially |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +26% | Strong data center computing revenue |
| Semiconductor revenue ($219M) | Roughly flat | Grew 4% sequentially but just below last year's mid-cycle peak |
| Data center computing revenue ($194M) | +102% | Record demand and strong adoption of high-power AI solutions |
| Industrial and medical revenue ($72M) | +12% | Demand strengthening despite sequential decline from factory prioritization to data center |
| Telecom and networking revenue ($25M) | +16% | Strength in AI-related networking programs |
| Gross margin (40.1%) | +220 bps | Better product mix and lower other cost of sales |
| Operating margin (19.1%) | +560 bps | Operating leverage, with OpEx up only 9% versus 26% revenue growth |
| Adjusted EBITDA ($108M) | +66% | Record level on operating leverage |
| EPS ($2.09) | +70% | Higher revenue, margin expansion, and operating leverage |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Data center AI demand and supply constraints | — | Record revenue with strong forecasts tempered by downstream customer constraints; upside bias to 2026 | Rising |
| Gross margin progression toward 43% goal | Targeting 40% during the year | Achieved over 40% in Q1, line of sight to 43%, possibly 41% by year-end | Rising |
| New semiconductor plasma power products (eVoS, eVerest, NavX) | — | Widespread customer acceptance at leading edge, expanding to other nodes and device types | Rising |
| Capacity expansion and Thailand factory | Thailand broke ground in 2023, planned for 2027 | Pulling Thailand spend into 2H 2026; capacity to exceed $2.5B exiting year and over $3.5B fully built | Rising |
| Industrial and medical recovery | Two-year inventory correction | Market recovered with rising bookings, backlog, and normalized inventory | Rising |
| 800-V data center power transition | — | Sampling 4kW/6kW/8kW modules at ~98% efficiency; meaningful revenue from 2027–2028 | Rising |
| M&A to expand industrial and medical breadth | Valuation mismatch limited deals | Solid pipeline; valuation gaps closing, acquisition possible in the not-too-distant future | Steady |