Q3 2026 results
| Metric | Result | Change |
|---|---|---|
| Revenue | $1.72 billion | up 11% year-over-year |
| Non-GAAP EPS | $0.90 | above guidance |
| Non-GAAP Gross Margin | 41.2% | up 190 basis points sequentially |
| AI Data Center Revenue | $180 million | up 39% sequentially |
| Automotive Revenue | $777 million | down 1% sequentially |
| Industrial Revenue | $467 million | up 10% sequentially |
Guidance and outlook
- Q4 revenue is expected to be in the range of $1.715 billion to $1.815 billion.
- Q4 non-GAAP gross margin is expected to be between 41.5% and 43.5%.
- Q4 non-GAAP earnings per share is expected in the range of $0.95 to $1.07.
- Full year capital expenditures are expected to be approximately 2% of revenue.
How management sounded
Positive (+6 on our -10 to +10 scale). Management expressed confidence in their long-term strategy and AI data center growth, raising their 2030 revenue target for that segment by $500 million. Management sounded more upbeat than on 8% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Automotive supply reallocation
Asked: Does underserving the auto market have long-term share implications?
Answer: No, it is a short-term supply-driven decision to prioritize AI and industrial demand; automotive remains strategic and growth will resume in 2027.
Gross margin drivers
Asked: What are the puts and takes for gross margin expansion?
Answer: Utilization improvement is the biggest driver, with every point of utilization worth 25 to 30 basis points of margin improvement, alongside favorable product mix.
Ferric acquisition
Asked: What makes Ferric's technology unique?
Answer: It offers superior transient performance, a compact footprint, and best-in-class Z height, which are critical for high-end AI processor power delivery.
Industrial strength
Asked: What is driving the industrial growth?
Answer: The AI halo effect, with demand for energy infrastructure and grid-related power solutions, as well as improving PMIs.
What to watch before the next call
- The integration of the Ferric acquisition and its contribution to AI data center revenue.
- The resumption of automotive revenue growth in 2027 as supply constraints ease.
- Utilization rates in the fabs as the company scales to meet demand.
