Alpha and Omega Semiconductor 2026 Q1 Earnings Beats Expectations, Power IC Revenue Surges 37.3% YoY

Alpha and Omega Semiconductor (AOSL) reported fiscal 2026 Q1 earnings on Nov 6, 2025, with revenue rising 0.3% to $182.5M and narrowing losses to $0.07 per share, improving 22.2% YoY. While the earnings beat estimates, a backtest of buying shares post-revenue raises showed a -16% cumulative return over three years, underscoring the limitations of earnings-driven strategies.

Revenue

Computing and Communications segments offset declines in Consumer and Power Supply & Industrial, with Computing revenue up 27.1% YoY and 4.6% sequentially, representing 53.2% of total revenue. Communications revenue rose 21.4% sequentially despite a 7.8% YoY decline. Power IC revenue hit a record $72.7M, surging 37.3% YoY and 5.9% sequentially, now accounting for 40% of product revenue. Consumer revenue fell 25.8% YoY and 11.6% sequentially, while Power Supply & Industrial revenue declined 12.4% YoY and 5.6% sequentially.

Earnings/Net Income

AOSL narrowed its net loss to $-2.12M in Q1 2026, a 15% reduction from $-2.5M in Q1 2025. The EPS improvement of 22.2% (from -$0.09 to -$0.07) reflects progress, though the company remains unprofitable.

Post-Earnings Price Action Review

The strategy of buying AOSL shares after quarterly revenue raises and holding for 30 days showed poor performance over the past three years, with a -16% cumulative return—significantly underperforming the market. This highlights the volatility of earnings-driven strategies, as quarterly figures may not capture broader market dynamics, industry trends, or company-specific risks. Investors are advised to consider long-term growth prospects, valuation, and strategic positioning rather than relying solely on short-term earnings data.

CEO Commentary

CEO Stephen Chang emphasized growth in Computing and Communications, driven by Power ICs and controller sales, which boosted gross margins. He highlighted the company’s shift from component supplier to total solutions provider and optimism about AI, data centers, and graphics markets.

Guidance

AOSL expects Q2 2026 revenue of $160M ±$10M, with GAAP gross margin at 22.3% ±1% and non-GAAP gross margin at 23.0% ±1%. Operating expenses are projected at $47.1M (GAAP) and $40.5M (non-GAAP), with interest income exceeding expenses by $1.0M.

Additional News

Recent developments include a B. Riley downgrade from Buy to Neutral due to mixed Q1 results and Compute segment underperformance, despite a joint venture sale generating $94M. AOSL also announced support for 800VDC power architecture for AI data centers, signaling strategic bets on high-margin solutions. Institutional investors like JPMorgan and The Manufacturers Life Insurance Company increased holdings, reflecting confidence in long-term potential.

Key Risks:

High stock volatility (beta of 2.44), sector cyclicality, and profitability challenges persist. Investors should monitor AI demand normalization and gross margin trends.