ADVANCED ENERGY INDUSTRIES INC (AEIS): what the price requires
At today's price, ADVANCED ENERGY INDUSTRIES INC (AEIS) is priced for today's economics sustained for ~17.8 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-19 · Source: https://boothcheck.com/report/AEIS
Headline
| Field | Value |
|---|---|
| Ticker | AEIS |
| Company | ADVANCED ENERGY INDUSTRIES INC |
| Current price | $298.70/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 19.0% |
| Operating margin today | 9.9% |
| Margin expansion implied | +9.1pp |
| Must persist for | 17.8y |
| Multiple paid | 66x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 11.8% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.6 years.
Reconcile: at the x-ray's 9.3% required return this reads ~11.9 years; the models below use their own rates.
How unusual the bet is: high
| Reference | Value |
|---|---|
| vs own history | +0.00σ |
| cohort percentile (of 178 peers) | 90 |
| sustained it ~10 years at this level | 15% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 5.05x | 4 | expensive |
| Earnings | 5.79x | 3 | expensive |
| Relative | 1.81x | 5 | expensive |
| Growth | 0.84x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.4%); the inversion above states its own rate.
Per-Model Detail (n=15)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $192.42 | 1.55x | yes | FCF base $0.2B, growth 22% (input: historical growth), terminal g 4.0%, WACC 8.4%, 7yr projection |
| DCF Exit Multiple | Growth | $357.05 | 0.84x | yes | Exit EV/EBITDA: 57.4x / 59.4x / 61.4x (bear / base = today's held flat / bull), 7yr |
| Relative Valuation | Relative | $165.15 | 1.81x | yes | P/E 35.25x (blended: static sector reference 22x + trailing (TTM) 66x), scenarios: 28.5x / 35.3x / 42.0x (bear / base = reference held flat / bull), EV/EBITDA 29.02x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $48.80 | 6.12x | yes | BV/sh $32.81, ROE (TTM) 13.8%, ke 9.3% |
| Two-Stage Excess Return | Asset | $58.94 | 5.07x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $367.40 | 0.81x | yes | Rev $1.9B, growth 22% (input: historical growth; tapered), Terminal P/S: 5.3x / 6.6x / 7.9x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $57.24 | 5.22x | yes | EPS $4.77, growth 2% (input: historical EPS growth), PEG=43.18 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $31.02 | 9.63x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.16B × (1−4%) / WACC 8.4% → EPV (no growth) |
| Residual Income | Asset | $60.94 | 4.90x | yes | BV $32.81 + 5yr PV of (ROE (TTM) 13.8% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $59.34 | 5.03x | yes | √(22.5 × EPS $4.77 × BVPS $32.81) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $70.91 | 4.21x | yes | EBITDA $0.22B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $4.42 | 67.58x | yes | FCF $68.3M / Kₑ 9.3% — zero-growth perpetuity (excluded from median) |
| SBC-Adj FCF Yield | Earnings | $0.01 | 29870.00x | yes | SBC-adj FCF $0.01B (FCF $0.07B − SBC $0.06B) capitalized at Kₑ (excluded from median) |
| Ben Graham Formula | Earnings | $153.91 | 1.94x | yes | EPS $4.77 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $13.18 | 22.66x | yes | BV $32.81 × (ROIC 3.4% / WACC 8.4%) (excluded from median) |
| P/Sales Sector | Relative | $225.73 | 1.32x | yes | Revenue $1.91B × sector P/S 5.0x |
| PEG Fair Value | Relative | $178.87 | 1.67x | yes | EPS $4.77 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $51.57 | 5.79x | yes | EPS $4.77 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $435.5m |
| Net debt / NOPAT (after-tax) | 2.52x |
| Net debt / operating income (pre-tax) | 2.42x |
| Interest coverage | 10.8x |
| Share count CAGR (dilution) | 2.8% |
| Burning cash | no |
Bullet Takeaways
Advanced Energy makes precision power-conversion systems for semiconductor equipment, data centers, and industrial and medical uses. At $372.92 the price reads as paying about 82x company-wide operating income, with only the growth-DCF reaching the price; every static method (asset, earnings-power, peer multiples) says richly valued.
The data-center turn is the reason. Q1 2026 revenue rose 26% to $511M, with data-center computing revenue more than doubling to $194.2M, and operating margin expanded 560 basis points year over year to about 19%. Management raised full-year revenue growth guidance to the low-to-mid 20s and expects data center to grow in the mid-30s.
The valuation embeds about 21 years of growth at the self-funding ceiling, which the engine flags as elevated. The balance sheet is sound (net debt about $435M, interest coverage above 12x), so the risk is not solvency; it is paying a durability premium that requires the AI power cycle to run for a very long time.
Bull Case
What the standard valuation models miss about Advanced Energy is the difference between what its income statement showed through the last semiconductor downcycle and what the business has become as AI data-center power demand arrived. For most of its history Advanced Energy was a cyclical supplier of plasma-power and process-control products to chip-equipment makers, and the static models still price it that way, anchoring to a normalized operating income that reflects trough years. But the company's core competence is broader than that cycle: as its filing puts it, Advanced Energy takes "raw electrical power coming from either the utility or the building facility and convert it into various types of highly controllable, usable power that is predictable, repeatable" (FY2025 10-K, accession 0001104659-26-014731). That capability is exactly what an AI data center needs as rack power densities explode, and the company has moved into it with the new ADH series of high-efficiency DC-DC converters for 800V AI data-center architectures, delivering up to 8 kW peak and integrating into megawatt-capable rack power solutions.
The second pillar is the evidence that the transition is already in the numbers, not just the pipeline. Q1 2026 revenue rose 26% year over year to $511M, beating estimates, and data-center computing revenue more than doubled to a record $194.2M. Gross margin reached 40.1%, the highest since the Artesyn acquisition in 2019, and operating margin expanded 560 basis points to about 19.1%. Management raised full-year revenue growth guidance to the low-to-mid 20% range and guided data center to grow in the mid-30s. A business showing simultaneous revenue acceleration and margin expansion is demonstrating operating leverage, which is the signature of a supplier moving up the value chain rather than just riding a cycle.
The third pillar is the durability the price is actually paying for. The valuation engine is explicit that only the growth-DCF reaches the price and that the bet is on durable compounding the static frames cannot capture, a moat and durability premium. Advanced Energy's moat rests on engineering deeply embedded, mission-critical power systems into customers' tools and racks, where switching costs are high and reliability is paramount. The balance sheet supports the build: net debt of about $435M against $699M of liquid assets, with interest coverage above 12x, gives the company room to expand capacity and fund the product roadmap. If AI infrastructure power demand persists, the durability premium is the thesis, and the company's record data-center quarter and raised guidance are the early proof.
Bear Case
The bear case is most honest when framed as a disagreement among the valuation methods, because here the disagreement is stark and the conservative methods are the credible ones. Strip the stock down to what it earns and owns today, and almost every grounded model lands a fraction of the price. The earnings-power value, which capitalizes a normalized EBIT with no growth, is about $30 against a $373 price. The excess-return and residual-income models, anchored to a book value per share near $32.81 and a TTM ROE of 13.8%, land in the high $40s to low $60s. The ROIC-justified book value is about $13, reflecting a reported ROIC near 3% against a WACC near 9%. Only the DCF that extrapolates 22% historical growth far into the future, and an exit-multiple model that holds today's extreme EBITDA multiple, reach the price. When the only method that justifies a price is the one that assumes the recent growth rate persists for decades, the conservative methods are usually telling the more honest story.
The inversion sharpens the point. At $372.92 the market is paying about 82x company-wide operating income, which a single solve reads as requiring operating growth held at the self-funding ceiling for roughly 21 years. The engine labels this elevated, above what fundamentals comfortably support, and notes that historically only about 15% of comparable fast-growers sustained such a pace for even ten years. The price is not braced for a normal outcome; it is underwriting an exceptional one, and it leaves no margin if the AI data-center power cycle proves shorter or more competitive than the bulls expect.
The third risk is the competitive and cyclical reality the filing names directly: "the markets we serve are highly competitive and characterized by rapid technological" change, with "competitive pressures driven by continuing technology migration and changing customer demand" (FY2025 10-K, accession 0001104659-26-014731). Data-center power conversion is attracting every capable power-electronics vendor precisely because the dollars are large, so the 40% gross margin that just hit a post-Artesyn high is a target for competition. And the semiconductor-equipment half of the business remains cyclical; a chip-capex pause would pull down a meaningful chunk of revenue while the data-center segment carries the growth. Paying 82x operating income for a business that is partly cyclical and newly competitive in its growth segment is the core risk, and the static models are quantifying exactly how much of the price depends on the durability assumption holding.
Valuation
Advanced Energy is a textbook duration-premium case. At $372.92 the market is paying about 82x company-wide operating income, which a single solve reads as implying growth held at the self-funding ceiling for roughly 21 years at a 12.2% cost of capital. The engine characterizes the priced-in assumption as elevated, above what fundamentals comfortably support.
The model families disagree sharply, and the disagreement is the information. The growth methods reach or approach the price: the exit-multiple DCF lands near $432 and the discounted future market cap near $459, both holding rich forward multiples, while the perpetual-growth DCF lands lower at about $186. Every other family sits far below price. The relative methods land near $179 to $226, the asset methods (excess return, residual income, Graham number) cluster in the high $40s to low $60s, and the earnings-power and earnings-yield methods land near $30 to $52. The FCF-yield methods are near-meaningless here because free cash flow is small relative to the market value, a sign that current cash generation does not remotely support the price.
The practical read is that this is a growth-and-durability purchase, full stop. The reader is underwriting that durability at today's price. The balance sheet removes solvency from the worry list, but it does nothing to close the gap between the static value and the price; only sustained execution can do that.
Catalysts
Advanced Energy reported Q1 2026 results in early May 2026 with revenue up 26% to $511M, non-GAAP EPS of $2.09 ahead of a roughly $1.97 estimate, and a record $194.2M of data-center computing revenue, more than double the prior year. Management raised full-year revenue growth guidance to the low-to-mid 20% range, guided data center to grow in the mid-30s, and set Q2 2026 revenue at about $540M plus or minus $20M. The next print, and whether data-center momentum and margin expansion continue, is the key near-term catalyst.
The product catalyst is the AI power roadmap. Advanced Energy launched its ADH series of high-efficiency DC-DC converters for 800V DC AI data-center architectures, delivering up to 8 kW peak and integrating with its NDQ and Hot Swap Control modules into megawatt-capable rack power solutions. Design wins and ramp of the 800V platform are the signals that would convert the data-center narrative into durable revenue, since rack power architecture is shifting toward higher-voltage distribution as AI density rises.
Analyst sentiment has been broadly positive and rising. Cantor Fitzgerald initiated coverage favorably, and Baird, Citi, Needham, Susquehanna, Stifel, and KeyBanc all raised targets in early 2026, with KeyBanc moving to $375 and the average target near $394. The risk to the catalyst path is the cyclical semiconductor-equipment half of the business and the competitive intensity of data-center power conversion; a chip-capex pause or a pricing battle in power electronics would test the margin gains the recent quarters delivered.
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- MPWR (MONOLITHIC POWER SYSTEMS INC)
- FY2025 10-K: …partners utilize prior to shipping to our customers. The manufacturing facilities we utilize in Asia enable us to benefit from shorter manufacturing cycle times and lower labor and overhead costs. We have expanded our product testing capabilities in these facilities and are able to take advantage of the rich pool of…
- FY2025 10-K: …of such products. We consider our primary competitors to include Analog Devices, Infineon Technologies, NXP Semiconductors, ON Semiconductor, Power Integrations, Renesas Electronics, ROHM Semiconductor, Semtech, STMicroelectronics and Texas Instruments. 9 Table of Contents We expect continued competition from…
- POWI (POWER INTEGRATIONS, INC.)
- FY2025 10-K: …with alternatives from such companies as Infineon, Mitsubishi Electric, Fuji Electric, Semikron and Hangzhou Firstack Technology Co., as well as driver circuits made up of discrete devices. Our motor-driver ICs compete with power modules from such companies as ON Semiconductor, Infineon, STMicroelectronics,…
- FY2025 10-K: …is subject to change based on the relative pricing of solutions that compete with ours. Variations in product mix, end-market mix and customer mix can also cause our gross margin to fluctuate. Also, because we purchase a large percentage of our silicon wafers from foundries located in Japan, our gross margin is…
- VICR (VICOR CORPORATION)
- FY2025 10-K: …2023 total net revenues. Competition and Market Characteristics The competitive characteristics of the markets we serve with Advanced Products and Brick Products can differ significantly. For example, in the higher-performance segments of computing we serve, our Advanced Products most often compete with solutions…
- FY2025 10-K: Our quarterly consolidated operating results can be difficult to forecast and have been subject to significant fluctuations. We plan our production and inventory levels based on management's estimates of customer demand, customer forecasts, and other information sources. Customer forecasts, particularly those of OEM,…
- DIOD (DIODES INC /DEL/)
- FY2025 10-K: …of Financial Condition and Results of Operations - Business Outlook" in Part II, Item 7 and "Risk Factors - The success of our business depends on the strength of the global economy and the stability of the financial markets, and any weaknesses in these areas may have a material adverse effect on our net sales,…
- FY2025 10-K: …and does not, imply a relationship with, or endorsement or sponsorship of us by, the trade name or trademark owners. All trademarks appearing in this Annual Report not owned by us are the property of their holders. COMPETITION Numerous s emiconductor manufacturers and distributors serve the discrete, logic, analog,…
- SMTC (SEMTECH CORP)
- FY2025 10-K: …and, in certain cases, our ability to persuade customers to design these new products into their applications. Semiconductor Industry The semiconductor industry is characterized by decreasing average unit selling prices over the life of a product and as volumes increase. However, price decreases can sometimes be…
- FY2025 10-K: …cycles that characterize the industry. The timing, length and volatility of these cycles are difficult to predict. The semiconductor industry has historically been cyclical due to sudden changes in demand, the amount of manufacturing capacity and changes in the technology employed in semiconductors. The rate of…
- ALGM (ALLEGRO MICROSYSTEMS, INC.)
- FY2025 10-K: …and profitability. We participate in intensely competitive end markets in the global semiconductor industry. Our competitive landscape includes rapid technological change in product design and manufacturing, continuous declines in ASPs, and customers who make purchase decisions based on a mix of factors of varying…
- FY2025 10-K: …semiconductor wafer suppliers, or estimate our customers' demand could have a material adverse effect on our net sales, business, financial condition and results of operations. Shifts in our product mix, customer mix or channel mix may result in declines in gross margin. Gross margins on individual products typically…
- MTSI (MACOM Technology Solutions Holdings, Inc.)
- FY2025 10-K: …and Personnel We face intense competition in our industry, and our inability to compete successfully could negatively affect our operating results. The semiconductor industry is highly competitive. While we compete with a wide variety of companies, our significant competitors include, among others , ADI, Broadcom,…
- FY2025 10-K: …our distributors. We believe the primary drivers of our future revenue growth will include: • continued growth in the demand for high-performance analog, digital and optical semiconductors in our three primary markets; • introducing new products using advanced technologies, added features, higher levels of…
- MCHP (MICROCHIP TECHNOLOGY INCORPORATED)
- FY2025 10-K: …balances of the Company's receivables. Note 3 . Geographic and Segment Information The Company's business is made up of two operating segments, semiconductor products and technology licensing. These segments represent management's view of the business for which separate financial information is available and…
- FY2025 10-K: …the Company's manufacturing capabilities to help ensure the efficiency of the Company's operations and fulfillment of customer requirements. The technology licensing segment includes sales and licensing of the Company's intellectual property. The CODM uses segment gross profit for evaluating each segment's…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.