Advanced Energy's Strong Sales Growth and Margin Improvements Justify Buy Rating with $150 Target Price.

Benchmark Co. analyst Mark Miller has maintained a Buy rating for Advanced Energy with a target price of $150. The company reported record sales in the Data Center segment and expects a 17% year-over-year sales growth in 2025, with margins improving to around 40% by the end of the year. Miller is a 5-star analyst with an average return of 16.0% and a 52.81% success rate. KeyBanc also reiterated a Buy rating with a $160.00 price target.

Advanced Energy Industries (AEIS) has reported a robust performance in the second quarter of 2025, with a significant increase in revenue and strong growth in its AI-driven Data Center Computing solutions. The company's focus on AI data center power supplies and next-generation plasma power products for semiconductor manufacturing has paid off, leading to a 21% year-over-year increase in GAAP revenue to $441.7 million.

The standout performer for the quarter was the Data Center Computing segment, which saw its revenue nearly double to $141.7 million, accounting for 32% of total company revenue. This remarkable growth was fueled by strong demand for AI data center solutions, with multiple hyperscale customers ramping up new system designs [1].

While Data Center Computing showed explosive growth, the Semiconductor Equipment business remained the largest revenue driver for Advanced Energy, contributing $209.7 million, or 47.5% of total revenue. The company's growth in this area outpaced the wafer fabrication equipment industry, which is expected to grow just 0-5% in 2025. Management noted rapid customer adoption of new plasma power products for logic and memory chip manufacturing, essential for creating high-performance chips [1].

The Industrial and Medical segment showed signs of recovery, with revenue of $68.7 million, up 7% from the previous quarter despite being down 13% year-over-year. The Telecom and Networking segment contributed $21.7 million, holding steady compared to the previous quarter.

Advanced Energy continued its focus on manufacturing optimization, expanding operations in Mexico and investing in a new Thailand facility. These efforts are expected to improve cost structures and better manage tariffs. The company also maintained strong financial discipline, keeping operating expense growth well below the revenue growth rate.

Looking ahead, Advanced Energy provided guidance for Q3 2025, projecting revenue of $420 million (plus or minus $20 million) and non-GAAP EPS of $1.30 (with a $0.30 range). More notably, the company projects an impressive 80% growth in its data center business for 2025, underscoring the accelerating demand for AI-related solutions [2].

Analysts have maintained a positive outlook on Advanced Energy. Benchmark Co. analyst Mark Miller has maintained a Buy rating with a target price of $150, while KeyBanc also reiterated a Buy rating with a $160.00 price target. Miller is a 5-star analyst with an average return of 16.0% and a 52.81% success rate [2].

Despite the strong performance, investors should be aware of potential risks. These include customer concentration risk, as a large share of sales comes from two major semiconductor equipment suppliers. The ongoing recovery in the Industrial and Medical segment and the impact of tariffs on certain product lines also remain areas to watch. Additionally, while manufacturing optimization costs persist, the company expects these investments to support future profitability [1].

In conclusion, Advanced Energy's Q2 2025 results demonstrate the company's strong position in the rapidly growing AI and data center markets, as well as its continued dominance in semiconductor equipment power solutions. As AI demand accelerates, the company appears well-positioned for continued growth in the coming quarters.

References:
[1] https://theoutpost.ai/news-story/advanced-energy-reports-strong-q2-2025-results-driven-by-ai-powered-data-center-growth-18723/
[2] https://seekingalpha.com/news/4479401-advanced-energy-projects-80-percent-data-center-growth-in-2025-as-ai-demand-accelerates