Advanced Energy Doubles Its Operating Margin: Rapid Earnings Reaction

Advanced Energy Industries (NASDAQ:AEIS) grew third-quarter revenue 50% to about $696 million, and GAAP earnings per share more than doubled to $2.80. Shares rose about 10% in early after-hours trading. Sales are now growing much faster than costs, so profit is climbing fast. The weak spot is cash, which is not keeping up with earnings. This is operating leverage at work: operating expenses rose just 17% from a year ago. Research and overhead costs don't grow with every order, so most of the extra sales dollars fell straight to profit. A higher tax rate kept net income from rising as fast as operating income. Most of the growth came from two markets tied to the same trend. Data center computing revenue rose 49%, on top of the chip equipment surge. Both depend on AI spending, since AI servers and the tools that make AI chips both need precise power. That makes the run strong but also concentrated.

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